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Feds and others give $200 billion to the Financial Markets

biz.yahoo.com — Federal Reserve and other central banks said they will pump $200 billion into the financial markets to help ease the strain from the credit crisis. The Feds acting in concert with the European Central Bank, Bank of Canada and the Swiss National Bank, agreed to loan banks money in exchange for debt that includes slumping mortgage backed securites

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magoghm, on 03/12/2008, -2/+73From the article: "The plan basically allows Wall Street's biggest institutions to put up troubled assets as collateral for loans, use the new capital to make money in the market, and then pay back the loan up to 28 days later."
Also from the article: "The Fed is basically going to take the bad loans off the banks' books, and the market seems to be loving that idea."
They are going to solve their problems in 28 days? I don't think so.
This sounds to me too much like: "I give you the opportunity to make your bad loans disappear from your books for 28 days, and instead you'll have lots of cash. As this is happening in March, you'll be able to have magnificent results in your financial reports for the first quarter of 2008. And it won't cost you too much, just a small interest on the money I'll loan to you".
That's the Fed's solutions to the problems with economy? Help the banks cook the books?
- jmpeagle, on 03/12/2008, -2/+8the last time they did this was in 1934....kind of scary about their belief of the imminent future is
  - mciampa1214, on 03/12/2008, -2/+41934 was around the turning point when things got better after 'the crash'. Are you saying a positive belief on the imminent future is scary?
    - netant, on 03/12/2008, -0/+6Well, it was a seeming turnaround improvement, until the economy fell flat on its face in 1937
      - mciampa1214, on 03/12/2008, -2/+2...and then, let's look at the big picture, not minor readjustments.
  - didiman, on 03/12/2008, -0/+1cue the Digg ecnomists...
- ElAssoWipo, on 03/12/2008, -2/+29"the Fed -- acting with the European Central Bank, the Bank of Canada and the Swiss National Bank -- agreed to loan investment banks money in exchange for debt"
  
  This is like getting a credit card to pay your credit card bills.
  - yunus, on 03/12/2008, -1/+12Or increasing your credit line while gambling. Sure you lost the last 100 bets in a row but if you keep increasing your bet eventually you will win and make a ton of money right?
    - ElAssoWipo, on 03/12/2008, -1/+9Lol yeah that's pretty much it. They are gambling the entire currency on future growth that is very unlikely to happen.
      
      They've been making the same mistake since the 1920's. They still don't get that more money doesn't mean more growth. It just means your dollar is worth that much less. And in a global economy, that's pretty much the worst possible thing that can happen.
      
      Debt incurred with a high currency, reimbursement with a low currency... They just made the debt bigger for short term "relief".
  - BEloftyIRONS, on 03/12/2008, -0/+8It's the perfect plan. You pay your bills with a credit cad. Then you pay your credit card with the credit card. Then you use the credit card you already payed off to pay for the other credit card, repeat. How can you loose?
    - johnpaul191, on 03/12/2008, -0/+6it sounds like the financial version of a perpetual motion machine.... and like the perpetual motion machines, it never seems to work.
      maybe people that try are only able to keep that fixed amount of debt in rotation. if they add to card A, card B won't pay it off and the cycle collapses? I really don't know.
    - ElAssoWipo, on 03/12/2008, -0/+5You lose when something unpredicted happens and you have to spend money you don't have and can't get more credit.
  - flogistan, on 03/12/2008, -0/+2Thank you!
  - netant, on 03/12/2008, -0/+6Actually, it may be worse. It sounds like its using the busted CDOs & SIVs as COLLATERAL to the loans. If the market makes another downturn, and the banks can't return the loan, the reserve banks could be, in theory, stuck with the worthless paper.
    
    On one hand, the reserve banks are privately owned, so its shareholders would be the one's burned. BUT given that, I find it hard to believe the shareholders would agree to getting burned. So, on some level, the American public will be holding the *****.
    
    What it REALLY means is that the con artists that took bad mortgages, packaged them into derivatives, and got false ratings for them, are getting their asses bailed out with the free money, without even letting the bank suffer a profit loss for their actions. That cannot be good.
    
    Other than America's currency being hyperinflated into worthless paper, I am not seeing the downside. Is it a possible solution to the credit crunch, or merely a delaying action, so the crooks can scamper away on the taxpayers' dime?
- brufleth, on 03/12/2008, -0/+3Maybe the assumption is that a good first quarter will encourage people to invest and cause an upturn in the market. I don't know if I see that happening in 28 days though.
- magoghm, on 03/12/2008, -1/+4The way I see it is that big banks, big corporations and huge central governments are the evolutionary equivalent of dinosaurs. They are doomed to fail, and there's nobody who will be able to save them. Centralized control is a bad design, and its problems increase exponentially with size.
  Take a look at all the effort that has gone into designing parallel computers. A central point of control has at least two major flaws:
  1. Central control is a performance bottleneck
  2. Central control means a single point of failure which can crash the whole system
  On top of that, when you have people in charge of central control then you have the problem that they will always manipulate it to their own advantage. It is inevitable.
- VitriolAndAngst, on 03/12/2008, -2/+6Well the Fed knows exactly what they are doing.
  
  What they are doing is removing the bad debts and letting the banks make more profits. The taxpayer will have to pay off the taxpayer. The banks will safely move all their money offshore while we are left with all the debt. This is just more of the Leveraged Buyout of America.
  
  Get used to toll roads owned by Chinese corporations.
- magoghm, on 03/12/2008, -0/+3I have a proposal: let's switch from using real numbers for money to using complex numbers. At least complex numbers have a real part and an imaginary part, which might be more realistic way to look at money :)
- rpgmaker, on 03/12/2008, -0/+3I don't think the Fed is making all this mess unconsciously, there's something going on behind curtains. Well, ten years from here we must be able to know what was it :)
- chaserm, on 03/14/2008, -0/+2 In a radical move to liquefy the bankrupt and insolvent US banking system, the US Federal Reservehas begun accepting all sorts of worthless trash and crap as collateral from banks and securitiesdealers in exchange for new government "Sewage Backed Treasury Bonds" (SBTBs).
  Banks are rushing dumpsters and tankers full of worthless crap to Washington to obtain as many of the SBTBs as possible.
  "Sewage Backed Treasury Bonds are exactly what they sound like," said Fed Chairman Ben Bernanke. "They are government bonds backed up by the crap of American citizens and securities dealers. There is nothing as pure, as wholesome and high quality as the trash and sewage produced by the people and dealers of the USA."
  The new SBTBs are hopefully going to save the bacon of Citibank, Bear Stearns and other bankrupt US financial institutions which have nothing but worthless crap as assets, Bernanke stated.
  The Federal Reserve is accepting worthless mortgage backed securities, credit card and vehicle backed securities, all useless securitized paper and collateralized debt obligations in fact, and derivatives of all kinds, in addition to household waste and the output of sewage treatment plants across the nation.
  Yet meanwhile, the pile of crap is growing every larger surrounding the Federal Reserve building in Washington as the mounds are dumped, leaving an awful stench that permeates the entire city.
  Many patriotic citizens are taking the initiative to travel to Washington to take a dump on the lawns of the Federal Reserve with hopes of catching some of the SBTBs that Bernanke has been seen flinging out the windows of the Fed as their reward.
  In response to the Fed initiative, US stock markets skyrocketed hundreds of points even as the appalling aroma sent residents and visitors to Washington fleeing.
- Kent4jmj, on 03/15/2008, -0/+1Sirach 21.8 A man who builds his house with other people's money is like one who gathers stones for his burial mound.
  
  And I would guess that any one helping him does the same. So, by implication, as taxpayers who are "helping" that man we are gathering the stones for our burial too.
chaserm, on 03/12/2008, -4/+32Fed Rally on Garbage Paper!
'Before we continue, let's understand what the Fed actually did: Rather than merely expanding the existing Term Auction Facility (TAF), they went several steps further. They created a new credit facility, the Term Securities Lending Facility (TSLF). Then, they empowered the TSLF to accept a broad range of private collateral -- "AAA" private mortgages in addition to those that are agency paper. '
Why did they do this?
-New pressures on ALL agency spreads;
-Rising mortgage rates despite FOMC rate cuts;
Ongoing limited credit availablility;
-Dramatic widening spreads between mortgage-backed paper and US Treasuries
The good news is this will help brokers and banks; the bad news is it will do nothing to help the Housing market, or stop the decline in House prices. Nor will it help resolve the inverted pyramid of derivatives that sits atop Housing. And, one has to believe it will only add to inflationary pressures.
No recession at any cost seems to be the Feds' philosophy in light of the latest massive cash infusion to Banks...
- caferrell, on 03/12/2008, -2/+17Trouble is the recession is already here, and it is driven by too much debt. This is not a problem of liquididty, it is a probem of debt. More short term debt will cause a momentary recovery followed by a deeper fall in markets, particularly monetary markets.
  The dollar continues to dive and US industry cannot stop it because so much of our manufacturing is now gone that we cannot take advantage of the low dollar. What is our "service economy" going to sell to China? Starbucks franchises?
  - netant, on 03/12/2008, -2/+7I dugg you up, even though I sorta disagree with some minor details.
    
    Whether there is a problem with liquidity, depends on how you define liquidity and debt. Presuming the problem is the subprime loans (and its looking like its merely the trigger, not the entire problem), if you inflate the money supply, while letting the banks make money off of free money from the Fed, you could string it out to the point where the bad loans become less significant as a percentage of the economy, in exchange for the American dollar to lose a large percentage of its value.
    
    More short term debt from who? Where? Short term debts doesn't matter as long as its invested in such to create an increase in GNP. The only thing to cause a fall in markets (which isn't the central issue anyway) is lowered investor confidence, an error in where the investors thought the market would be, or decrease in economic activity. Value in the money markets is simply whether there's the right amount of fiat currency to represent the public's perceived value of the currency.
    
    I don't see the dollar diving as a PERMANENT loss of purchasing power, which you seem to be thinking. Yes, our manufacturing has gone overseas, and in theory that means we don't benefit from the cheap dollar to export cheaper goods. But you make the presumption the only thing that can be exported is manufactured products. What should happen is that the rational investor would build more industry to service the customers in that market, and surplus its production if its allowed to move that product overseas. If you're GM, your sorta screwed. If you're Toyota, you merely take all that worthless dollars that aren't doing anything, invest in building factories in Kentucky, or whereever, and then you're still making a profit selling cars in the US with cheaply produced US labor, and can make even more money selling those cars overseas. And the same thing applies to all countries with a currency surplus in dollars. What is our "service economy" going to sell? Who cares, all the big players are international corporations anyway, the US sold its economic sovereignty a long time ago.
strafefire, on 03/12/2008, -6/+97Dear American Taxpayer,

I'd like to thank you for saving my yacht. You guys are SO ***** awesome! Seriously.

I mean, I KNEW that giving all those loans to people who could not afford them wasn't the brightest idea, but with housing prices the way they were, and the fact that my boys and I figured out a way to sell that debt to other idiots -- I mean business partners -- We were rolling in so much dough that I actually was able to propose to my THIRD wife!

Man she's hawt! Seriously, she's got an ass that just goes on for days...

Too bad that idiot Johnathan put those money back guarantees on the SIVs. That *****! It almost ended EVERYTHING!

But then YOU, the American Taxpayer stepped in! w00t!

And I thank you!

So now the rates that we are charged from the central bank are OUTRAGEOUSLY low. And you'd think that we'd pass those savings on to our borrowers, right?

***** NO! Seriously, I got a couple of babies to feed, a bunch of alimony payments to make, my C class Mercedes is not as fast as my neighbor's Porsche, so I have got to upgrade now, My three vacation houses do not have maids in them right now (man do I miss Rosalina. She would do things with a cucumber that my second wife would NEVER dream of), and my country club dues were a little past due.

So, thanks American Taxpayer. You guys are ***** stupid -- I mean, awesome!

Sign,

Your friendly "neighborhood" multinational banking conglomerate.

P.S. I just realized that I need one of those motorized flat screen HDTV thingys that I just saw on digg:
http://digg.com/hardware/What_Every_Man_Wants_in_B ...

So, in order to get one of those for every room in every one of my homes, I am going to have to raise ATM rates to $3.75. Thanks for being soooooo understanding!
- Turambar, on 03/12/2008, -0/+7this comment made me happy and sad simultaneously.
  
  i'm sure that counts as some form of win.
- manstein01, on 03/12/2008, -1/+6Well done dude.
- Phrostee, on 03/12/2008, -0/+3dugg for the mental image of an old banker saying w00t!
- VitriolAndAngst, on 03/12/2008, -0/+3Yeah, and meanwhile, all the Business 101 Sheeple, who constantly tell us "we are not experts" will watch the TV Experts who make lots of money, spinning this larceny as though it were good for us. The Banksters have GOT to be exuberant over this. Wow, they keep the money in exchange for forfeiting debts that they can't get rid of? Brilliant!
- Namakemono, on 03/12/2008, -0/+4No need to read any further, you win.
- gottadiggit, on 03/12/2008, -0/+3Your not so Hot!
  I have my own Personal Ball Washer.
  
  www.youtube.com/watch?v=F-Z5bMBdNYo
- JoshuaLowe, on 03/12/2008, -0/+4One of the funniest and most true things ever posted on Digg.
- aboutlogin, on 03/13/2008, -0/+1quote;
  "So let me get this straight. I could now walk up to the Fed with my crappy mortgage backed securities and trade them in for rock solid Treasuries? Sure, I’d have to take some kind of haircut, but I can turn something nobody else wants at any price and is therefore effectively worthless, into something liquid and valuable? I take something that is difficult, if not impossible to value and trade it in at what price? I take something with real credit risk and trade it in for something with no credit risk. Junk for gold. Awesome. Just awesome."
digindrivefast, on 03/12/2008, -11/+2$$$ =$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$%%%%%%%%%%%%%%%%%%%%%%%
Bush likes it!
jeffiek, on 03/12/2008, -4/+55Wait a second. The FED has $200 billion sitting around in a closet doing nothing?

Or did they just print some funny money?
- airiox, on 03/12/2008, -3/+15They just printed it.
- Waiting2awake, on 03/12/2008, -2/+23 Just printed it, and bailed out todays crooks with our grandchildrens cash.
  
  This people seriously need to be made an example of.
- alpinecow, on 03/12/2008, -3/+8The Fed is lending TREASURY SECURITIES not cash. The system open market account (SOMA) has around $700 billion in securities at any given time and Interest earned on those securities is returned to the Treasury Department.
  - VitriolAndAngst, on 03/12/2008, -1/+10Oh, well then, since you called the "MONEY" by a different name, that makes it completely OK.
    Look, I work at a Financial Services company. It's either an asset or a debt. It's ALL MONEY. Treasury Securities have to be paid -- almost like these bad Collateraiized Debts, only, they still have value. So the Government, traded TAXPAYER backed financial instruments, for some paper that is going to be written off, and ultimately ALSO paid for by the Taxpayer -- they just doubled our debt and made a tidy profit for the banks. Wake the hell up.
- yunus, on 03/12/2008, -1/+4They don't even have to actually print it. When you view your bank statement its a read only format in which the bank tells you how much you have in your account. They just type numbers into their account and make their balance whatever they want.
  - BESTenemy, on 03/12/2008, -0/+1 Exactly. The beauty of fractional reserve banking is that the banks only have to have a fraction of assets to back up the credit in circulation. At any given point in time there's at least 9 times more money in circulation than the assets backing them. We're a service society, so we predominently base the value of our money on economic activity, but kind of like with falsely rated SIV's we assume the value of our returns will always be positive. Too bad exponential math doesn't work perpetually in a finite environment.
    
    Reminds me of a TED lecture:
    
    If there is a bacteria that multiplies by splitting once every minute, then how long will it take for the bacteria to fill up a bottle. The answer is: "1 hour". When is the bottle going to be half full? The answe is: "1 minute before the one hour mark". The phylosophical question is: "when do you think the bacteria will realize it's running out of space? 1 minute prior to the hour? 2 minutes? 3 minutes? Do you think by the time that realization comes it'll be able to do anything about the situation?"
- VitriolAndAngst, on 03/12/2008, -0/+2They borrowed it from some foreign countries -- at more interest than they are charging the banks.
  Damn, the Government is really sweet, when they want to be.
Qtip42, on 03/12/2008, -3/+23I should start printing dollars on my inkjet, they're worth about the same as real ones! Paper money FTL
- 1randomguy08, on 03/12/2008, -0/+27ink is expensive these days.
macwac, on 03/12/2008, -4/+16In other words the fed just nationalized a bunch of properties for 28 days until the banks can pay it back? all of that money was just printed.. and what do we do if the banks make even worse investments and the markets falls further and they lose the money loaned to them? loan them more printed money? how much of the stock market is now owned by the government? - it seems they've been pumping in billions upon billions the last 5 months.
- elcob32, on 03/12/2008, -2/+8The Fed is not the government. The Fed is owned by several anonymous foreign bankers, and have been working to screw the American tax payer since before income taxes, and before they were initially founded.
  - theutopian, on 03/12/2008, -6/+3The foreign bankers aren't anonymous and mostly not foreign either. Don't believe everything you read on RonPaul.com.
    - jhodapp, on 03/12/2008, -4/+2That is not what Ron Paul says. The Feds are part of the government, set in place by the government, and have an unelected head of the government which is more like a dictator of our money than any other part of the government. Take a read of "Free to Choose" by Milton Friedman. It'll give you a lot of insight.
      - theutopian, on 03/12/2008, -1/+4The Federal Reserve is not part of the Federal Government.
    - theutopian, on 03/12/2008, -3/+1sorry
airiox, on 03/12/2008, -5/+21They are devaluing the dollar on purpose. They will make it so worthless that American's will be begging to replace it with a Canadian, US, Mexican unified currency. If you have money sitting in your bank account, withdraw it now and visit your nearest jeweler to convert it into Gold and Silver.
- Waiting2awake, on 03/12/2008, -0/+3Time to go see Russel Oliver in Toronto...
  
  Ohhhh YEAH!!!
  
  *Jeez I hate that twit
- ussoldier, on 03/12/2008, -4/+3Nope, the Euro
  
  Or one of us is going to start cranking out Liberty Dollars again....
  - GarretJax, on 03/12/2008, -0/+1They have begun to crank out Liberty Dollars again. They even have a 10th anniversary addition available.
- netant, on 03/12/2008, -3/+1Actually, the guys that wear the bendy, metallic headgear, calls it... the Amero!
- rune420, on 03/12/2008, -1/+3Are you serious, the jeweler? If what you say is true, it would be smarter to put it all in an ETC (e.g. gold backed).
webaddict, on 03/12/2008, -4/+3Isn't this more than the actual STIMULUS package going to the American taxpayers? If they would just give everyone in America all this damn money... who knows what the totals are, we'd all be set and spending money and a recession wouldn't exist. Let's say $2 trillion, right? So keeping numbers simple here we have this:

Fed gives $2 trillion to US Taxpayers instead

Underestimating Population at 300 million

That would be $6,666.66 for every single American. Kind of an evil number, but it's just ridiculous.
- Strawgate, on 03/12/2008, -0/+10I hope your not serious, the problem is americans are spending money they dont have, giving them more money they shouldn't have doesn't solve the problem.
  - jriggs420, on 03/12/2008, -1/+1So what then? They should give it to the banks that got us into this situation in the first place?
    - Lukesed, on 03/12/2008, -0/+5How about they stop giving out money that doesn't exist and let the economy run its natural cycle.
- macman2k, on 03/12/2008, -0/+1This 28 day loan gives the banks time to wait for the tax rebates to be deposited at which time the 28 day loan becomes a perm. loan because the money will be part of the national debt.
brjohnson789, on 03/12/2008, -0/+7I think the 'hope' is that the financial markets will calm down a bit and get everything settled. To me the problem is that the whole liquidity problem started because of write-downs of CDOs etc due to mortgage defaults rising. Well mortgage defaults are still going up, and based on the number of ARMs resetting still this year the defaults should increase further, meaning the CDOs will need to be further devalued. How many more times can the Fed just loan out a couple hundred bil? As many times as they want; no matter what they will not let the big banks fail, mark my words. They would first destroy the currency and most people's savings before letting the banks take the entire hit. God forbid we have a free market here.
- magoghm, on 03/12/2008, -0/+2The way I see it is that big banks, big corporations and huge central governments are the evolutionary equivalent of dinosaurs. They are doomed to fail, and there's nobody who will be able to save them. Centralized control is a bad design, and its problems increase exponentially with size.
  - scuvball, on 03/12/2008, -3/+1I was amused by the first sentence.
    but,
    Centralized control is a bad design? No, actually it is quite efficient. Sometimes you run into the problem of coordinating so many activities, but computer technologies have put a leash on the dinosaur that makes it easier to control.
    - magoghm, on 03/12/2008, -0/+1Take a look at all the effort that has gone into designing parallel computers. A central point of control has at least two major flaws:
      1. Central control is a performance bottleneck
      2. Central control means a single point of failure which can crash the whole system
      On top of that, when you have people in charge of central control then you have the problem that they will always manipulate it to their own advantage. It is inevitable.
Zlorp, on 03/12/2008, -3/+5well hey! at least the banks have to bare no responsibility for giving people loans they shouldnt have. i love how people are expected to be responsible in this country, but not businesses. businesses are expected to maximize profits at whatever cost necessary, no matter who they ***** over, and if they take part in shady practices the government will just bail them out when they get into trouble. ahh capitalism. at least we all have an equal opportunity right? right?
- magoghm, on 03/12/2008, -0/+14Under real capitalism those business would go bankrupt very fast. We don't have capitalism, what we have is corporatism.
- brjohnson789, on 03/12/2008, -0/+6What we have is 'fascism'
VoteHillary, on 03/12/2008, -9/+2I use Dollars for toiletpaper now, it's cheaper
peaceninja, on 03/12/2008, -1/+5acc to the comments, everyone says that the feds are going to print new money but this isnt the case...the government is just making more debt. anyways, each article i read seems to explain it differently, and as a finance laymen it sounds completely different to me each time. NPR put it best last night: The Feds are trading T-bills in exchange for the defaulted loans held by the banks so that the banks will have better quarterly reports. Does this sound right to you finance experts?
- blinkerbug, on 03/12/2008, -1/+4so the Federal Reserve (not the federal government) now owns the defaulted loans?? i.e. they own the mortgages to foreclosed homes? Is that kind of troubling that an unelected arm of the government is acquiring US property from the citizens? .. And didn't the Fed create this mess in the first place to boost the bank profits?
  - Waiting2awake, on 03/12/2008, -0/+5 Shhh you are thinking to much and drawing lines to connect issues, that people will just feel better not knowing they are connected.
    
    Here, have a cookie, you'll feel right as rain.
  - peaceninja, on 03/12/2008, -0/+1blinkerbug, thats the impression I got--that the federal reserve seems to have all these T-bills (owned by the federal government) sitting around and that they are going to trade them in for the mortgages to foreclosed homes. but i'm not too sure and was hoping someone on digg can clarify what I heard on NPR, but really what's clear to me is that this is such a complex system that the federal reserve could have taken any number of different course of actions and the analysts will be divided on the situation, and then the laymen (such as digg users) get lost with all the analysts and politicians unintentionally obfuscating the matter.
- brjohnson789, on 03/12/2008, -1/+1The federal reserve is lending its 'money' to these banks using questionable assets as collateral. However this 'money' is printed out of nowhere. When the banks repay the loans the money in effect disappears. So for the next 28 days there's an extra couple hundred billion in cash floating around in the world.
blinkerbug, on 03/12/2008, -4/+7and in other news.. http://www.chron.com/disp/story.mpl/headline/natio ...
it's found that the metal in nickels and pennies cost more than they're worth. The US dollar has dropped so much that the coins are worth more as scrap metal. The Fed responds by doing what? Printing more money and devaluing the dollar even more. Yikes.
- brjohnson789, on 03/12/2008, -0/+3They also responded by increasing the penalty for just 'buying' coins and selling them as scrap metal.
- StGhurka, on 03/12/2008, -0/+2I've been saving my pre-1982 pennies for years.Their value is closing on on 2 cents each now - but it's illegal to sell them for scrap metal.
  
  http://www.usatoday.com/money/2006-12-14-melting-b ...
  - davidlow, on 03/12/2008, -0/+1I bought cardboard when it was 6¢ a ton.
- netant, on 03/12/2008, -0/+2Well, they also use cheaper materials than actual commodity metals, so the produced coin is cheaper than its represented value. And they talk about phasing out the penny and the nickel.
phexerian, on 03/12/2008, -7/+1The Feds should be bailing out the American people, not the banking institutions who our out to enslave us financially. That money could go to the taxpayers so we can either pay off our debt to the banks, or spend it on items to stimulate the economy. While you are at it destroy the IRS and put the money making responsibilities in the hands of the government so we can vote the bastards out when they screw up like this. Can't vote the Fed out directly.
- netant, on 03/12/2008, -0/+3Why should the Fed bail out the American people? They were the dumbasses that allowed this to come about. If they cracked down a decade ago (hell, not bothered voting in GWB), they wouldn't be confronted with this problem. If you agree to be ripped off by Chase, is Chase acting as a thief?
  
  Idiot, once you destroy the IRS, how do you propose to keep a standing military? Maintain highways? Pay the salaries to regulate services (like airports) or prevent fraud? Who do you want managing the money supply? Extremely well renown economists and business professionals, or lawyers who care only what the idiot client demands?
- jhodapp, on 03/12/2008, -0/+1I have one thing to say. Read Milton Friedman's "Free to Choose" book or watch the PBS series from the early 1980s. It'll be a good education for you on the history of the Fed and also learning about economics on a micro and macro level.
h3smith, on 03/12/2008, -3/+5I love it, lets reward banks who make massive mistakes and give mortgages to idiots who shouldn't have them in the first place. next, lets bail out all the morons who can't pay their mortgages because they bit off more than they can chew. Sorry responsible Americans, you once again get *****. Good job being smart and screwing yourself out of being irresponsible.
- bjornski, on 03/12/2008, -0/+1The banks didn't make "mistakes". They committed FRAUD. They KNEW what they were doing wasn't right.
  
  It wasn't an accident.
scottmc, on 03/12/2008, -6/+18The Fed just prints more money, and the dollar just keeps sinking. Seems Ron Paul warned us all about this...
- scottmc, on 03/12/2008, -3/+10Here's Ron Paul on this story: http://www.youtube.com/watch?v=5lDlhuelnX0
- mike17032, on 03/12/2008, -5/+3Course he warned us about the evil Blacks too.
  - jhodapp, on 03/12/2008, -1/+2He did not, he's not racist. Nice cheap shot below the belt and thanks for citing your credible references.
  - cybrguy, on 03/12/2008, -0/+1GoGo Baseless accusation generator! Todays baseless accusation is: Racism
- cybrguy, on 03/12/2008, -0/+2Paul is informative as always, Although I am amused that other countries are bebasing their currency a bit in this process.
sangjmoon, on 03/12/2008, -5/+1The entire subprime mess occurred because the banks had too much money to loan and not enough good lendees to loan to. The best way to help the economy would be for the government to eliminate taxes on businesses which would also increase the pool of good lendees. Other than that, it would be better if the government did nothing than to exacerbate the ups and downs of the economic cycle. The government is notoriously bad at timing its interference to actually buffer against the peaks and valleys of the economic cycle.
sdellboy, on 03/12/2008, -2/+4I'm coming to visit America ASA-*****-P....my Aussie dollar is almost 1 for 1.....
- bjornski, on 03/12/2008, -0/+1It'll be a cheap vacation for you, that's for sure.
RPliberty, on 03/12/2008, -5/+18Like Ron says, if printing money is the answer to all financial woes, why not print enough to eliminate the need for American citizens to work at all?
- blinkerbug, on 03/12/2008, -7/+0that's Ronald Reagan? His Alzheimers did make him say some whacky things..
Anth, on 03/12/2008, -1/+10Say hello to $150 oil! The sinking American Dollar isn't going to get any stronger this way...
crazywarthog, on 03/12/2008, -11/+7A majority of posters here have been dumbed down via the US government education system. They may know how to put a rubber on a cucumber and that little Billy is the luckiest boy at school because he has two daddies. But clearly they know nothing about basic econ 101.

So just ignore them !
- KyleRayner, on 03/12/2008, -1/+6Well why dont you just explain it for everybody, Professor Economy, sir? Or was that just another worthless post in a sea of worthless posts?
  - diggduggDOOM, on 03/12/2008, -0/+0Don't forget the completely relevant slam on sex ed and gay parents.
    
    WTF?
- drewj05, on 03/12/2008, -6/+1but Ron Paul says SO!
bsmang, on 03/12/2008, -0/+2This is like plugging the hole in the dam with your finger, but where the hole is as big as your head.
- mikephimikephi, on 03/12/2008, -1/+2I think you mean: "all one can do is put your finger in the dyke and pray"
  - dracostimpy, on 03/12/2008, -0/+1Dykes won't let me put my finger in them.
- snotrokit, on 03/12/2008, -0/+2Funny thing, that is what Hillary's battle plan is too!
drewj05, on 03/12/2008, -4/+2In the short run this is one of the best options for our economy. Yes in the long run this not the best thing for us, but as John Maynard Keynes stated "In the long run we are all dead." This will boost the economy and hopefully spur more investment as interest rates lower.
- kemp34, on 03/12/2008, -0/+1You selfish prick. In the long run my kids will have to pay for your idiocy.
  - diggduggDOOM, on 03/12/2008, -0/+0Look at the bright side. Your kids could kick this on down the road, too. Then it's your kid's kids who will be paying... and really that's a problem their parents (your kids) will be responsible for.
morgino, on 03/12/2008, -1/+2Heres how i works kids, they print money and give it to all of the banks and other corporate institutions. Those instutions then take this worthless money and put it into stocks and other things that are actually somewhat tangible. Then after a while the dollar is devalued because the govt has printed so much of it and you are the one to feel the asskicking.
I used to think the Amero (supposed combined currency of the US, Mexico and Canada) was a joke but the more they seem to devalue the dollar on purpose the more it seems to make sense.
groverblue, on 03/12/2008, -0/+9that's my ***** money they are giving away! I don't even own a ***** HOUSE!
- ivandir, on 03/12/2008, -0/+3To bad dude, USA owns you and you do what they say. Now bend over.
mrzack, on 03/12/2008, -3/+6*****, If Ron PaL was president this would've never happened. This mess wouldn't have gotten so out of control.
- SickMonkey, on 03/12/2008, -2/+3Not true. The mess in the mortgage industry was caused by unregulated free markets. If anything, we needed stricter lending practices put in place, but everyone was to greedy to listen even when Greenspan warned of the coming collapse of the housing market.
  - KyleRayner, on 03/12/2008, -0/+3Is this the same Greenspan who said back in 2004 that there was no worry about the housing bubble bursting?
    http://realtytimes.com/rtpages/20041021_bubbleburs ...
  - jeffiek, on 03/12/2008, -0/+2BULL.. The mess in the mortgage industry was caused by the FED cutting interest rates. They flooded the market with money.
    
    Banks HAD to find a way to push it out. THAT's the main cause of the mess. Of course, once the ball started rolling it just continued. Everyone put on their rose colored glasses and the bubble just keep getting bigger.
    
    UNREGULATED?????
    
    You would be lucky to live long enough to read all the banking regulations. The financial industry is anything but a free market. It has problems, and you're never going to solve them by blaming them on something that doesn't exist.
- cybrguy, on 03/12/2008, -0/+1You forget that the FED and government bailouts are the only thing allowing banks to be so irresponsible. In a TRUE free market you don't save people who make bad decisions. Those banks would go bankrupt, and all that would remain would be the banks who lend responsibly. Just like most things, bailouts cause irresponsibility.
  
  A free market is far from perfect, but it is a far wiser guiding standard than mal-informed politicians.
  Name any major market that you think is truely free right now and then dig down to see the government Effing it up.
Yellow22, on 03/12/2008, -0/+11Lot of misunderstanding about how this actually works. While these loans have a duration of 28 days, they aren't limited to 28 days. So broker/bank goes to the Fed with "AAA" rated mortage backed securities which the Fed accepts as collateral and offers an even exchange of US treasuries. At the end of the 28 day period the 2 parties don't swap back the MBS and treasuries, the exchange is simply renewed (rolled over) for another 28 day period, ad infinitum. In this way, the Fed turns an illiquid asset (MBS) for which there are no buyers at the moment into a liquid asset (US treasuries). Think of how a juggler might only be able to hold 2-3 balls in their hands, but can keep 7 or 8 in the air in constant rotation and you'll start to grasp what's actually happening. Then again most people are financially/economically/monetarily illiterate so YMMV.
Look4Truth, on 03/12/2008, -0/+3Band Aid on a severed artery.
freezeout, on 03/12/2008, -2/+4Every dollar the Fed "pumps" to save its greedy friends means the dollars in your pocket are worth less. You will notice this when you go to the gas station or supermarket. See, when *you* ***** up - you have to pay the price, when banks ***** up - *you* have to pay the price, this is called "the free market". free for some, expensive for the rest of us.
- bjornski, on 03/12/2008, -0/+1Socialize the expense, and privatize the gains.
  
  It's the American way.
geniuslocimusic, on 03/12/2008, -1/+0I'm no economist (not that it seems to matter anymore), but does anyone else have the feeling that things are at least temporarily going to get kinda bad in this country?
I mean ***** is messed up now, but then the market is going to freak if a democrat is elected just because of their party.....I don't know I hope I'm wrong
SickMonkey, on 03/12/2008, -0/+3Just curious about the Libertarian perspective on this issue? I can understand why you would be upset about a fed bail-out of the mortgage industry. However, isn't it also obvious at this point that this whole mess could have easily been avoided from the very start if the fed would have just stepped in and put some reasonable restrictions on the lending industry in the first place? Even Greenspan warned against the "housing bubble" but, in the end, the free market was given free reign and now this is what we are left to contend with.
- Yellow22, on 03/12/2008, -0/+41) the Fed has no authority to put "restrictions on the lending industry", that would be the job of our legislators who appear to have all but abdicated their role as such, 2) Alan Greenspan created the whole charade, at one point in early 00's encouraging everyone to take out 2nd mortgages on their houses to prop up consumer spending and to take advantage of low variable interest rate loan products.
- VitriolAndAngst, on 03/12/2008, -3/+2Well, since the Government allows Banks -- a private institution, to basically, create money (they can lend many times more than they take in as deposits) -- and all this is ultimately backed by the Government -- then why are Banks not run by the government? A loan is something that will hopefully provide more in economic creation in the future, for a debt incurred today. That sounds really good for helping our economy. But, as a private institution, banks lobby governments and then get to do all sorts of crazy -- higher profit, higher risk things that make THEM lots of money and hurt our economy, then they can pass the liability onto the taxpayer. Because they OWN the damn politicians.
  
  Fundamentally, Libertarians have a totally flawed concept of Markets, and if they thought about what SickMonkey mentioned -- well, they'd be asked to THINK, which I'm sorry if it sounds like flame bate -- but if they ever THOUGHT about Free Markets, they would realize that both Denmark and Mexico are wealthy countries. One has Socialism, and the other has unfettered Capitalism and massive corruption. A totally free market, always leads to these sorts of failures.
  
  Thomas Jefferson was horrified at the notion of private banks. The founding fathers new it would be the end of our Democracy if we allowed them. This is just a ticking time bomb and our Economic Experts seem to have a short memory for the history of our Free Market. Same damn attitude of no government intervention (Kool Aid), was rampant just before the Great Depression. And that wasn't the first time either.
  - jeffiek, on 03/12/2008, -1/+1A GOVERNMENT enforced cartel runs the US banking industry. Read that again. GOVERNMENT enforced. Has been since 1913. It existed through the Great Depression, and started today's housing mess. Plus a couple other screw ups in between.
    
    Libertarians have flawed thinking???? The GOVERNMENT is running the economy into the ground, both with its own spending and through FED. The flaw is in the STATIST philosophy, thinking that central planning works, that power doesn't corrupt, and that eventually, someday, when they finally get the right people in office, everything will be rosy.
  - strafefire, on 03/12/2008, -0/+2WE ARE NOT A FREE MARKET! JUST LOOK AT IT! The Federal Reserve, with the permission of the Government, just gave out money to prop up institutions that in a FREE market should have FAILED!
- kemp34, on 03/12/2008, -0/+2The government encouraged the housing bubble at every turn.
dupswapdrop, on 03/12/2008, -0/+6Come on now lets all pull together and help out them rich bankers! You lose your home and get zip, they lose what amounts to a nickel and get millions.
NelsonR, on 03/12/2008, -0/+4All an illusion stalling the inevitable. Who pays for another bailout for Wall St. and the Banks?
You!!
More phony money, more devaluation of the dollar, more inflation and you thought you had it bad. Got to love the economics of the entire situation and the leaders in charge. Just saw Diesel now $3.89 a gallon and groceries skyrocketing in price, why? Commodity investing by, again our wall street, no sweating at work tycoons. You pay for their sweet portfolios. They care not, it's the present now and they pay for our elected officials party machines.
theutopian, on 03/12/2008, -2/+3Buried for inaccuracy. The headline is misleading. The FED is not 'giving' anyone anything, it's short term pay day loan. I don't understand why they keep trying to fix the economy by throwing money at it, it's broken, let it crash and correct itself. We're all ***** in the long run anyawy.
wufoo, on 03/12/2008, -0/+2I can't wait to see what inflation is like in the next couple years.
NelsonR, on 03/12/2008, -0/+1Why, the Treasury is taking crap for security and they know it. Would you take these bad loans as security? Well the citizens of the U.S. are now holding worthless paper not to mention the phony money in circulation.
foolawrence, on 03/12/2008, -0/+1Such good system, big business do something stupid, government help them. Small business do something stupid, no help. Maybe big business not more better than government.
VitriolAndAngst, on 03/12/2008, -1/+4MONEY by a different name, is still money.
It's either an asset or a debt. It's ALL MONEY. Treasury Securities have to be paid -- almost like these bad Collateraiized Debts, only, they still have value. So the Government, traded TAXPAYER backed financial instruments, for some paper that is going to be written off, and ultimately ALSO paid for by the Taxpayer -- they just doubled our debt and made a tidy profit for the banks. Wake the hell up.
eliotmat, on 03/12/2008, -0/+2yay!!!! The stock indexes went up!!!! The value of the dollar dropped some more!!!!

so basically we really didn't do anything.......
snotrokit, on 03/12/2008, -0/+2mmm Piss on that house fire.
britblogger, on 03/12/2008, -0/+2It's only going to prolong the inevitable. The US's economy is struggling, and this additional $200B is only going to further increase the nation's debt.
dungar, on 03/12/2008, -0/+2what's really intreresting is that the Fed doesn't really seem to care about debt. More debt is good, they seem to think. It appears they never plan on repaying it.
jjmdirector, on 03/12/2008, -0/+1Yeah... they will be printing MORE money out of thin air. Way to solve the problem. I love the way they think. more money in circulation mean less purchasing power for things like hmmm OIL, GOLD, and ... Everything. thanks Fed!
ColonelJessup, on 03/12/2008, -5/+1HEY EVERYONE I TOOK A MACROECONOMIC CLASS LAST SEMESTER THAT I BARELY PASSED WITH A "C", SO I KNOW WHAT I AM TALKING ABOUT HERE!

THE FEDERAL RESERVE PRINTS MONEY, AND USES IT FOR FINANCIAL STUFF. THEN THEY GIVE IT TO BANKS AND STUFF, LIKE WHEN THEY GIVE IT IT MAKES STUFF LIKE WORSE AND STUFF! THEN WALL STREET AND THE GUYS WHO LIKE INVEST AND STUFF, TAKE THE MONEY AND, LIKE, INVEST IT AND STUFF.

THEN LIKE, HALIBURTON AND BUSH AND CHENEY TAKE THE MONEY FROM THE TAXES AND THE FEDERAL RESERVE AND STUFF, AND THEN THEY DO BAD STUFF, THAT MAKES THINGS WORSE!

THEN WE HAVE A GREAT DEPRESION, LIKE THEY DID BACK IN, LIKE, YOU KNOW, LIKE A BUNCH OF YEARS AGO, WHEN EVERYONE WAS POOR!

YOU GUYS DON'T KNOW ANYTHING!!!!!11!!1!!!!!one1!
- jeffiek, on 03/12/2008, -0/+2We know how to type in lower case.
- KraftDinner101, on 03/14/2008, -0/+1Maybe you should go run around and stuff. Blow of some steam....
JoshuaLowe, on 03/12/2008, -0/+3Taxpayer sponsored buyout of corrupt banks and irresponsible borrowers. In essence, the screwing over of the people who are responsible for themselves. The rewarding of bad behavior. What a ***** this place is becoming.
optoomistic, on 03/12/2008, -0/+2What can we do other than shake our heads in disbelief as the currency we work for spirals downward chasing worthlessness? i have a feeling this "great" nation is on it way out!
Sovereigndk, on 03/12/2008, -0/+2the fed reserve giving up $
Have you seen the price of gas lately?
BS!
Those Private Bankers are stealing much more off the backs of the sheeple to more than make up for that pitance - gas - fruadulent INCOME TAX

No direct un-apportioned tax confirmed by the US Supreme Court rulings in CHAS. C. STEWARD MACH. CO. v. DAVIS, 301 U.S. 548, 581-582(1937)
Jeez, on 03/12/2008, -0/+1I have new found respect for the movie Fight club since the sub prime crisis.
- ivandir, on 03/12/2008, -0/+1Why is that?
ChipL, on 03/12/2008, -0/+1Helicopter Bernanky living up to his name.
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Feds and others give $200 billion to the Financial Markets

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