Some economics links.

JP Morgan buys Bear Stearns for $2/share. This is fantastic news. One, JP Morgan picked up Bear’s financial obligations, so they believe they can be met, and we don’t get a default that really could trigger a broader financial panic. Two, there’s no government bailout, at least not in this case. Bear fucked up, and they’re paying for it. This is is how financial markets are supposed to work: If you take on too much risk, or evaluate risk incorrectly, you may get burned, and Bear did.

The Buck Stops Where?: If you want to be a pessimist, the way that the Fed is cheapening the dollar is the best argument that our immediate economic future is dim. We’ve seen scattered reports in the last two weeks that the recession is already abating and that economic growth should resume in the next quarter, so why is the Fed still pushing interest rates down? This would be a good time for President Bush to step in and show the sort of economic leadership he showed earlier in his tenure when he pushed for lower marginal tax rates, elimination of the dividend tax (albeit temporarily), and freer trade. The editorial argues that the Bush administration has tacitly approved of Bernanke’s rate cuts, and if that’s true, it’s a huge mistake. A weak dollar will drive investment funds out of the country at a time when we need more coming in to help ease the credit crunch. This is one example where the equity markets have it wrong. The Fed needs to start bumping rates back up, and sooner rather than later.