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Is Fed Getting Hold On Crisis?

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The Federal Reserve surprised Wall Street Wednesday and said it will buy long-term Treasury bonds for the first time in four decades in an effort to revive the recession-hit economy.

The move sent 30-year mortgage rates to around their lowest levels on record.

Now investors are wondering if Fed Chairman Ben Bernanke had this bazooka ready to fire when he sat down with 60 Minutes on Sunday. At the time he said, “I do think that we will get (the economy) stabilized, and we'll see the recession coming to an end probably this year. We'll see recovery beginning next year. And it will pick up steam over time."

With Ben Bernake pulling out this latest big gun, will the economy get back on track, quickly?

For further insights we spoke with Sean Egan, the president of Egan Jones Capital. He was one of the first to recognize the current crisis; in fact he said to shun sub-prime mortgage backed bonds while larger rating agencies said they were investment grade.

Considering he was ahead of the curve at the beginning of the crisis we thought it would be interesting to see where he thinks we are now.

“The Fed is engaged and they’re doing everything they can to correct the problems but this is just a first step,” says Egan. “We need two or there more steps to get back on track.”

However, Egan is encouraged to see the Fed moving in what he calls the “right direction.”

And back to Bernanke for a moment. If you missed the 60 Minutes interview there were three things he wanted every American to know. They’re well worth repeating.

1) the Fed will do everything possible to support the recovery 2) recovery won’t happen until the banks are stabilized and 3) Bernanke has every confidence the economy will recover and that the US will remain the most powerful and dynamic economy in the world.


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