Monday, May 12, 2008
Stuart Thomson – Chief economist at Resolution Asset Managemen – “we are still within the Minsky moment”
The Federal Reserve's rescue of Bear Stearns in March represents an important milestone in the credit crunch, but it does not mark the beginning of the end of the crisis. Financial distress and the failure of a major American institution has been a feature of every post-War recession. The central bank rescue is an important gauge of the authorities' understanding of the financial problems, and provides several innovative channels to increase market liquidity. But it leaves plenty of surprises before the crisis is eventually resolved.