$200b Rescue Plan: Just-in-time, Or Too Late?

In a latest twist of event, US Federal Reserve announced a USD200billion rescue plan or liquidity injection into US credit market to alleviate the current US sub-prime mortgage crisis. The Fed said it was expanding a lending program and will accept a broader base of securities as collateral, including mortgage bonds whose value has declined as the housing bubble burst.

What a timely move and timely boost too, as Dow Jones were languishing around the critical support level and the lowest level for the past one and half year! Have Federal Reserve picked the best time of all and introduced one of the most effective strategy to help turning US ailing economy around? Ironically, with latest job data at an all-time low, one could not help but to think that recession is already in full swing. Time will tell but many seem to think that it is already too late as US is technically in recession.

As a result of the rescue plan, the Dow and Nasdaq rang up their biggest daily percentage gains since March 2003, with Dow going up by a massive 3.5% yesterday! Asian markets had responded positively to the news too, with modest gains from 1% to more than 2%. Hand on for a second, shouldn't we expect Asian markets to respond by a bigger margin? Perhaps even the rest of the world is not convinced of US latest story, as recent history suggests that we may still yet to see the worst....

Torture... slow death, i am afraid this is what the Yankee market is doing to the rest of the world! We may just have to sit it out and watch the play(s) unfold yet again!

Just-in-time or it's too late...time will tell.

What's your view on this? Do drop me a note.