Toothpicks and Bubble Gum

A couple weeks ago I jokingly asked if the Fed was going into the airline and auto business. Now I’m afraid I was right.

After Lehman failed, a large money market fund went down in price. That’s not supposed to happen, and there’s been a run on these funds. This in turn has made it really tough for a lot of companies to borrow short-term money. This is a big part of the credit crunch.

The Fed tried a fund guarantee, but that hasn’t worked. So now they’ve stepped in to loan short-term money to companies like GE, Kellogg, or Caterpillar. Yikes! This is just the latest chapter in the make-it-up-as-you-go-along rescue that Bernanke and Geithner are putting together.

But a piecemeal approach won’t work. What’s needed is a clear vision of what’s wrong and a systematic plan to fix it. In the meantime, having the Federal Government loan money to industrial America is dangerous. Because what starts as a government rescue ends as a political football. And what happens when the Fed owns its first big failure?

Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2014-09-04T14:00:20+00:00 October 8th, 2008|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. –
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