Think of Japan: see Bear Stearns arranged marriage.

<P> U.S. Federal Reserve Board (Fed) is reminiscent of the behavior of the nineties of last century in Japan. .</ P> <P> Fed may not want to hear that, but it is indeed some recent moves reminiscent of the Japanese financial crisis when people see some of the practices. .</ P> <P> one of the initiatives that led to an arranged marriage, the Bear Stearns (Bear Stearns) to promote the JP Morgan Chase (JP Morgan Chase) in the arms, to prevent the detonation of the Wall Street brokerage firm. .People can not help but think of the Bank of Japan used for decades "mutual security system", that is, strong institutions and government to promote mergers and weak institutions to support. .</ P> <P>, of course, Fed has no choice but to let it come to the edge of a cliff at Bear Stearns, in the end to pull back. .Fed to JP Morgan Chase has also provided 300 billion dollars in financial support. .</ P> <P> but on the balance sheet of Bear Stearns, the potential losses may be more than 30 billion U.S. dollars. .Although the shareholders of JP Morgan on Monday cheered, but in the long term, this transaction may bring them pain. .</ P> <P> It http://finance. News, New York, an independent financial services research firm Graham Fisher & Co.'s Managing director Joshua • Ross Canal (Joshua Rosner) said: "We do not have enough .courage to tell the truth, that the reason leading to market instability. "Rose Canal last spring, warned that banks should take full account of its mortgage losses. .But he said the bank, is still not done so. ."This is just the mix of assets, not the way to face reality." </ P> <P> and Japan in the 20th century case of 90 mortgage bonds and related assets of the real delay in the clearing price may be difficult to determine that enveloped the market .lingering uncertainty. .Banks will be more concerned about the potential risks against, rather than lend the money to maintain economic growth. .</ P> <P> Fed agreed to accept a potential non-performing assets as collateral rate cut and other measures to promote liquidity also prompted the dollar's depreciation. .Last week, the U.S. dollar since 1995, fell below 100 yen for the first time; since last June, the dollar fell against the yen exchange rate has nearly 22%. .</ P> <P> 20 century, the late 90s, the Japanese central bank will lower interest rates have been reduced to near zero, so the yen fell sharply. .Therefore, the yen carry trade has become a tool, that is, borrowing low yielding currencies, the currency higher investment income. .</ P> <P> take into account other parts of the United States and Europe, the spread between the huge, analysts have predicted that the dollar will become yet another tool for the carry trade. .Fed on Tuesday will almost certainly determine the goal of reducing the federal funds rate, ranging in between 0.5 to 1 percentage point, making the din of speech is even the dust. .(Editor: latest news, Fed on Tuesday has announced it will cut its key rate by 75 basis points.) </ P> <P> is not to say that Fed should stop cutting interest rates. .Avoid long-term recession is painful, may also be a Bernanke (Ben Bernake) the primary focus. .From Japan's Great Depression, Bernanke learned one thing: do not want to prompt the central bank, lowered interest rates will only make things worse. .</ P> <P> But if interest rates enough to stimulate consumer debt to increase spending, and let the paranoia of the banks are willing to lend, then the United States is likely to experience Japan has another nightmare: that economists .The so-called liquidity trap, in this case, then monetary policy will not help stimulate economic growth. .</ P>.