stries generally reported that they were passing on these cost increases to their customers,» the Chicago Fed said.while the economy is clearly in bad shape at the moment, it is less clear, from either the beige book or yesterday's data, whether this will be merely a period of sub par growth, or something more damaging.
«We are in a slow period of growth,» said Coronado, the Barclays economist. «But what we didn« t get from the report was any sense that things are contracting at a rapid pace. It »s really hard to tell how deep and how persistent this weakness will be.»
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Takes Broad Action to Avert Financial CrisisBank Backs Sale of Bear Stearns, Cuts Key Interest Rate, Extends New CreditNeil Irwin and David ChoPost Staff Writers, March 17, 2008; A01
Federal Reserve took dramatic action on multiple fronts last night to avert a crisis of the global financial system, backing the acquisition of wounded investment firm Bear Stearns and increasing the flow of money to other banks squeezed for credit. a weekend of marathon negotiations in New York and Washington, the central bank undertook a broad effort to prevent key financial players from going under, including the unprecedented offer of short-term loans to investment banks and an unexpected cut in a special bank interest rate. part of the deal, JP Morgan Chase, a major Wall Street bank, will buy Bear Stearns for a bargain-basement price, paying $ 2 a share for an institution that still plays a central role in executing financial transactions. Bear Stearns stock closed at $ 57 on Thursday and $ 30 on Friday. J.P. Morgan was unwilling to assume the risk of many of Bear Stearns «s mortgage and other complicated assets, so the Federal Reserve agreed to take on the risk of about $ 30 billion worth of those investments.Fed« is working to promote liquid, well-functioning financial markets, which are essential for economic growth, » Chairman Ben S. Bernanke said in a conference call with reporters last night. Treasury Secretary Henry M. Paulson Jr., Who was deeply involved in the talks though not a formal party to them, indicated support for the actions.Fed »s moves were meant to reverse a rising tide of panic that has buffeted Wall Street as banks and other institutions have found it increasingly difficult to get credit. While the steps may head off a generalized run on Wall Street banks, the central bank «s intervention looks unlikely to calm the recent volatility on markets as the trading week begins.markets opened sharply lower, with the Japanese Nikkei index down more than 4 percent at the end of its morning trading session today. Hong Kong »s Hang Seng index dropped more than 5 percent in early trading; markets in Australia and New Zealand were also down. And the dollar was down sharply, hitting a new low against the euro and the lowest level against the yen since 1995.extraordinary measures were made necessary, in the view of the policymakers, by the most dire threat facing world financial markets in years. Bear Stearns, in particular, was confronting a run on the bank as investors were too fearful of the future to make even overnight loans to the nation «s fifth-largest investment firm. If it had been allowed to fail, senior officials believed, it would have created a cascading crisis of confidence that could well have brought down several other lea...
