Market stagnating without the help of the Federal Reserve

Many analysts are suggesting that this may be the bottom for the financial markets which have had a rough few months and now touching on March’s lows.  The Federal Reserve has been inactive, giving people a reason to believe the drops are over but what happens if the Federal Reserve quits completely.  Now that we’ve seen at least a month with no activity we can see what kind of picture is painted in a market without the Federal Reserve and Ben Bernanke to throw the market a bone.

There are a few catalysts for Fed action circling in the market.  Out of control commodity prices are pushing the Federal Reserve to raise rates and fight inflation while the banking industry is calling for more liquidity.  When a “private” branch of the government, founded by the banks is calling for money, its almost certain that they’re going to get it.

The calls for liquidity from investment banks like Lehman Brothers and Washington mutual are scary.   The lenders need cash and need it quick, without action its likely that many of them will fail.  The entire economy has been centered around credit, borrowed and unborrowed and the liquidity in the homes of millions.

If the rally of the markets is going to continue, the federal reserve needs to act quickly.  Otherwise its dow 10,000 before we know it.  More coming soon