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The Federal Reserve comes to the rescue - again

Published Sun, Dec 21, 2014 · 09:50 PM

ONCE again, the US Federal Reserve has saved Wall Street - and, with it, most other global equity markets - from collapse with its assurances that it will give markets what they want.

From previous Fed chairman Ben Bernanke's promises to throw money from helicopters (hence the nickname Helicopter Ben) when the US market and economy craters to the present regime's statement last week that it will be "patient" when it comes to raising interest rates, the Fed has played saviour to markets everywhere, particularly Wall Street where the indices are almost back to all-time highs - again.

There are, of course, large doses of short-selling and short-covering involved in daily market life that typically cause prices to overshoot in either direction and there is little doubt that this is very much the case in all financial markets at present.

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