Monday, November 10, 2008

When Pump Priming Sucks

The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral.

Pretty scary opening paragraph.
Total Fed lending topped $2 trillion for the first time last week and has risen by 140 percent, or $1.172 trillion, in the seven weeks since Fed governors relaxed the collateral standards on Sept. 14. The difference includes a $788 billion increase in loans to banks through the Fed and $474 billion in other lending, mostly through the central bank's purchase of Fannie Mae and Freddie Mac bonds.

Oh this is a money quote here:
``I talk to Geithner and he was pretty sure that they're OK,'' said Frank, a Massachusetts Democrat. ``If the risk is that the Fed takes a little bit of a haircut, well that's regrettable.'' Such losses would be acceptable, he said, if the program helps revive the economy.

This has a potential of not only reducing our economy to lows not seen in 70 some years but also to allow other foreign interests to take-over our economy.
The Fed has lent at least $81 billion to American International Group Inc., the world's largest insurer, so that it can pay obligations to banks. AIG today said it received an expanded government rescue package valued at more than $150 billion.

When will the bleeding stop? When is enough bailouts enough? Who and HOW are we going to pay for all this? I'm not suggesting a conspiracy is at hand (as some have emailed me in the past)nor am I advocating anything other than keeping you informed. It's sad that while we give our government an allowance we have to babysit them like a 5 year old. This is all being done in the name of GREED folks.

I'd appreciate hearing your comments and ideas on this topic.

Something to ponder: As late as 1938, after almost a decade of governmental "pump priming," almost one out of five workers remained unemployed.


meleah rebeccah said...

"This is all being done in the name of GREED folks"

You got THAT right.

Jan said...

Actually, Steve..I think I'm still in a state of shock over how this election was run, and it's inevitable outcome.

I think it is going to one shocker after another, now.

Jason said...

The Fed is transparent in that it is subject to the oversight of Congress. Is twice a year not fast enough? The intent of Congress in shaping the Federal Reserve Act was to keep politics out of monetary policy. Legislation requires that the Federal Reserve reports annually on its activities to the Speaker of the House of Representatives.

Dazd said...

Yes Jason, twice a year is fast enough. However I must point out the fact that Secretary of Treasury has unlimited spending power under $250 billion dollars.

In other words, he is held accountable by no one in Congress or government for that matter.

Reporting is nothing about being held accountable.