The Fed in overdrive...

The Fed has markedly changed strategies with its announcement earlier this week that it would be committing $300 billion into treasuries and another $750 billion into mortgage backed securities. By doing so, it hopes to bring down longer term interest rates, thereby providing businesses and homeowners with much needed cheaper credit. The strategy seems to be working as long bonds have been rallying ever since the announcement was made. It also risks sparking inflation into the future, however, as the markets also seem to be signaling with the swift drop in the dollar and the sharp rally in both the value of gold and TIPS. The market is also indicating that it is not confident the Fed will succeed in tackling the perceived inflation threat.

The move which is meant to provide additional stimulus into the economy essentially diminishes the independence of the Federal Reserve as it sort of becomes an agent of the Treasury (effectively providing the government with cheaper credit). On the other hand the scale of the current crisis is unprecedented which in a way justifies the use of extreme measures to tackle it.

Some M&A activity in pharmaceuticals...

The dire economic environment seems to have triggered a series of mergers and acquisitions in the pharmaceutical industry that show no signs of ebbing. In January, for example, Pfizer made a $68 billion bid for Wyeth which was soon after followed by Roche's announcement that it was pursuing a full acquisition of Genentech. Most recently, Merck disclosed its intention to buy Schering-Plough in a $41.1 billion deal and there is now talk that the next potential target drug maker could be Bristol-Myers Squibb.
There are several reasons behind the consolidations. The ongoing stock market correction has depressed equity market prices substantially, making them increasingly attractive buys. Pharmaceutical firms are much less debt ridden and, unlike other sectors of the economy, can easily raise cash. Last but not least, companies like Merck are facing important drug patent expirations with few alternatives in the pipeline.
Acquiring or merging with a rival should ensure greater revenue stability through product diversification. On the other hand we can expect layoffs to occur over the short term as a result of the consolidations. Over the longer term, having fewer large firms in the industry may lead to complacency through diminished competition which might prompt firms to cutback in R&D investments. That in itself would be bad for society.