Mar 17

Written by: Booker B
3/17/2008 8:48 PM

News: The Fed gives up trying to stick its finger further and further into the dike and resorts to frantic bailing. Diesel powered bilge pumps are on order, but running them on $4 a gallon fuel is going to hurt.

Views: So how will our economic regulators --
[Hmmmm? Snicker or barf? Snicker or barf? I can't decide which is the right reaction to that term.]
-- anyway, how will they affect incentives for market participants in the long term by placing this floor under their downside risk? Not saying intervention is bad or unneeded. When Bear Stearns is at risk, something pretty dramatic needs to happen.

But it just about has to encourage ever wilder speculation if the traders know they'll be allowed to fall only so far before being rescued for the good of the markets as a whole. In effect, I suspect it'll erase the last traces of difference between investment and speculation -- if any still existed anywhere but in my imagination.

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