While everyone seems to be focused on which sermons Barack Obama heard from his minister and what the Second Amendment means, the United States, and by extension the world, is on the brink of a financial melt-down, which the Federal Reserve Board is doing its best to prevent.The Fed is now taking emergency actions-- for example approving a 30 billion dollar loan to J.P. Morgan to purchase Bear Stearns-- that it would not dream of taking in ordinary circumstances. In essence, the Fed is trading loans that are very low risk for loans that are very high risk and while simultaneously taking control of Bear Stearns' portfolio in order to protect itself. It has also announced that it will offer loans to other similarly endangered Wall Street investment firms.It is still unclear whether the Fed's strategies will work. From a constitutional standpoint, however, what is interesting is that few people seem to doubt the Fed's authority to take these steps without consulting anyone, including the President and Congress. That is, few people currently doubt the Fed's unilateral authority to make decisions that shape the fate of the world's most powerful economy. Indeed, not only do most people not object to this quasi-dictatorial power, they expect and even demand that the Fed take action immediately to stem the crisis. And, what is even more interesting, not only do they not expect President Bush to take control of these matters, they do not even want him to.
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