Market Correcting Itself


In the world of economics and finance these days saying a hurricane has hit is a lackluster description of what is going on. In the past 6 months we have had the Bear Stearn's bailout by JP Morgan-Chase brokered by the Fed, Freddie Mac and Fannie Mae being nationalized (Just saying that makes my skin crawl.), and now Merrill-Lynch and Lehman Brothers disappearing.

But in the case of Merril-Lynch you have Bank of America stepping up to buy them out, creating a huge financial colossus. This is an expansion of commercial banking into the world of financial investment, a rather bold move by Bank of America and JPMorgan-Chase. Although, intuitive, this move was done out of neccessity, but, it is a great example of a potential market correction.

As much as I hate to, I have to give a certain credit to the Fed for brokering the deal between Bear-Stearns and JP Morgan-Chase. If they had not their failure could have caused an economic tailspin that would have caused major problems for the world economy. This also opened the door, I feel, for BOA to expand its horizons into the world of finance banking. Now, the outcome of these bold moves still remain to be seen. But the financial and investment communities may have come up with an interesting way to survive the recent pitfalls of their greed. Although, we are far from being out of the woods, hopefully these institutions have learned their lessons.




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