Things are certainly busy, and now, perhaps we know why the Fed backstopped, rather than fronted, the Citi deal. It was working on backstopping Fannie and Freddie again and providing liquidity, via its New York arm, to the sorts of asset backed securities that are purportedly a bit more Main Street directed. The Fed is doing this partly with TARP money.
It looks quite reassuringly active, and stocks are up again. But there are more problem banks, according to the FDIC, and charities are hurting.
Nor does the carping stop there. As the shorts presumably turn to JPMorgan, some think Citi's bailout isn't enough, and it isn't completely clear that that bank fell because of mistakes unique to it. Meanwhile, the "Geithner isn't up to it" crowd has reached Andrew Sorkin.
But for those with their minds on other things, consider the Chinatown Thanksgiving.
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1. Posted by adam hartung on November 25, 2008 @ 15:29 | Permalink
Fed spending $100B to buy loans isn't much different than if the government spent $100B to buy SUVs off the dealer lots. These investments are not helping America, and its companies, become more competitive. We need to focus our assistance on moving forward with new business models that enhance competitiveness so companies can succeed in global markets. Read more at http://www.ThePhoenixPrinciple.com
2. Posted by fedgovernor on November 26, 2008 @ 8:49 | Permalink
The Fed isn't trying to solve the housing crisis. If the government wanted to solve the housing crisis, the government could directly lend the citizenry mortgage money at 1% over T-bill rates. However, the government isn't doing that.
That would immediately solve the liquidity crisis, the price crisis, the sales crisis and the supply crisis.
It would bankrupt a bunch of suits, but who cares about rich bankers really?
Why are Fannie and Freddie charging so much interest? If you want to move loans ... then you must LOWER prices to stimulate demand.
If the government is going to be in the money-lending business, it had better understand how high prices effect demand.
All the Fed is doing is ensuring a steady supply of tax dollars to a bunch of its privately owned member banks. It is, without a doubt, the greatest heist in history.
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