After the Federal Reserve's aggressive moves this week to ease the credit crunch, some are starting to wonder if the worst is finally over.
Well-known banking analyst Richard Bove of the US Punk Ziegel bank even delivered a report on the financial sector Thursday with the bold heading, "The Financial Crisis Is Over."
“There will be more negative developments, but they will be meaningless,” Bove wrote. “I'm convinced that all the signs that you would want to see that would tell you that this thing is over are there. And this is over.” He believes the key moment were the problems which called for the immediate Fed‘s reaction which he sees as “innovative, dramatic, and ... brilliant.”
It does indeed seem that the Fed’s actions were successful and calmed the markets down. The Standard & Poor’s 500 Index posted its first weekly gain in a month, and the dollar leapt from its lowest level since 1973. Investors who had poured money into gold, oil and corn, seeking a hedge against inflation and a weak dollar, sold commodities to raise cash or buy stocks. Concerns that the central bank would let inflation get out of control eased after the Fed cut its key interest rate by less than one percentage point.
Still, most are not convinced. Many analysts argue that the problems may be subsiding in some areas of the financial sector, but they're going to spread to other areas and that Bernanke is still not in the control of the situation. “He has taken extraordinary measures, things that we haven't seen since the Great Depression,” said former Fed vice chairman Alan Blinder, a Princeton University professor. “He's working overtime, literally and figuratively, to get this panic under control. But so far, it's not under control.”
And what is your opinion? Is the financial crises over yet? Or is just calm before the next storm? Do take part in our opinion poll!