Saturday, September 13, 2008

Natural Phenomenum in Financial Market

Since the August of 2007, government has intervened on multiple occasions: Fed emergent rate cuts in January 08; Bailout of Bear Stearns in March 08; Banning on naked-shorting in May 08; Bailing out GSEs on August 08. Each rescue brought in a rally, but the magnitude and length of the bounces fade each time. The lastest epside is the bailout of GSEs. The rally only lasted one day and was dashed consequently by the concerns of Lehman. One interesting way from an FT article to interpret the phenomenum is to draw an analogy with drugs. With each new shot, the dose becomes less effective.

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