Category: government as backstop

Fedaphobia…

Fedaphobia

[fed-uhfoh-bee-uh]

noun

1.  fear of irrational Fed easing doing irreparable harm to a rational short selling strategy

NYU economics professor puts faith in the Fed

“The current problem is not so much a stock market problem as it is a credit problem, and what we’re seeing in stocks is just a reaction to it,” said Richard Sylla, professor of economics and financial history at New York University’s Stern School of Business. “I don’t think it’ll be so bad since the Federal Reserve is prepared to provide the liquidity to let the market stabilize.”

Sylla said the Federal Reserve has had 28 years of good leadership and exhibits a much better understanding of history and how credit and the financial markets operate.

The above was from an article on WallSt.net titled, “What history tells us about market slumps.” Author Andrew Leckey’s conclusion:

So now we know the lesson: History shows it makes the most sense to stay put with your investments. Yet human beings aren’t always sensible.

My comment: Wrong history lesson, wrong economics textbook.

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