The spectre of paying out for the folly of others is not going down well with the US financial commentariat. A selection:
The New York Times’ David Brook reckons the Fed’s actions in bailing out Bear Stearns were a necessary evil given the extreme circumstances. American taxpayers appear to be grudgingly coming to terms with the fact that there will be an inevitable cost. It is just a question of how much that will be. But Brook says taxpayers shouldn’t be footing the bill for those who really should have known better.
The Fed is increasingly risking its reputation, says Edmund Andrews at the International Herald Tribune. The worry here is that America’s central bank becomes lender of first resort when people do idiotic things, like buying risky instruments they don’t understand.
The Wall Street Journal has Peter Eavis and David Reilly – Bear’s Fall Sparks Soul Searching – noting, unsurprisingly, that despite falling prices sentiment seems to be increasingly cautious. Too many people remain wary of buying too soon.
Meanwhile, the WSJ’s Mark Gonloff, penning the Ahead of the Tape column, remains fairly bearish on the Fed’s action, declaring this to be Reminiscent Of Japan in ’90s.” Gonloff reckons the US needs to beware of the liquidity trap – having lots of cash and no growth.