Analysis - US government bailout ? is this the start of the recovery?

[Scott B]

Also, let's not forget that the US Federal Reserve created a very benign lending climate by keeping interests very low for nearly three years in order to minimise the recession that followed the bursting of the dotcom bubble. The gray bar indicates the period of recession.



So you could argue that the US government is at least in part responsible for all this. Would the market for sub-prime lending have boomed if interest rates hadn't been at 1% for so long?

There doesn't seem to be any way of avoiding speculative bubbles, but if the Fed had allowed there to be a proper correction - i.e. bigger recession - after the dotcom bubble burst, then maybe it wouldn't have to be dealing with a much biggesr crisis now.