As I write this article, the Federal Reserve has taken a firm stance indicating that they will not bail out investors and institutions who are now in trouble due to subprime lending issues. The Fed did however, state that they will take action if the subprime lending issue begins to affect the overall economic growth. I am in full support of the Federal Reserve in their decision. The Fed has stated since last year that our economic growth is modest, and we still show no sign of needing a rate cut, other than to bail out the people who made these risky investments.
I believe that the chaos and voilatility that the market has been experiencing for over a month is going to finally settle. We have a clear and official stance by the Federal Reserve, and it is the correct stance. The goal is to keep inflation under control, while maintaining moderate economic growth. Now, I will begin to reinvest in the market, but I will do it slowly and cautiously, as there is still the possiblity of big events occuring like the Fed taking action if they see the economy begining to deteriorate due to the subprime lending issues.
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