Stocks still down; third time is not the charm for Fed

[Roland99]

Source: MarketWatch

Stocks still down; third time is not the charm for Fed
Countrywide says mortgage market trouble serious threatens its bottom line

Stock prices on Friday remained under water after an attempted rebound faltered as three daily injections of liquidity by the Federal Reserve followed like moves by other central banks failed to calm fears of a global credit crisis.


...

Continuing the bad news trend on Friday, Countrywide Financial Corp. (CFC 27.05, -1.61, -5.6%) said its allowance for credit losses climbed 97% from the end of last year. Its stock was off 4.7%. The nation's largest home lender said trouble in the mortgage market seriously threatens its earnings and financial condition. See full story.

...

The Fed on Friday injected a total of $38 billion into the markets in three steps, which began with a $19 billion injection into the banking system, followed by a second addition of $16 billion and finally a third dose of $3 billion.

The Fed's decision to conduct multiple operations could mean "there is a greater strain in the market than is evident" or that the central bank wants to make sure there is enough liquidity in the financial system to help it stabilize, said Crescenzi.

Read more: http://www.marketwatch.com/news/story/stocks-down-after-attempted-rebound/story.aspx?guid=%7BAC186060%2DBBBD%2D462D%2D923E%2D0259425CC7C4%7D

[C_U_L8R]

1. It's gonna be a dramatic close

Whatta crazy day.

What's the republican spin on the big fat mess they made?

[StClone]

2. Sell Short make a killing in worthless U.S. "W"ollars

:crazy:

Twenty-five years of fighting the diseases of Reagonomics Supply-side comes to fruition.

[ramapo]

3. Blame the Democrat's tax and spend

Not enough tax cuts. Democratic spending binge.

Works every time.

[yardwork]

7. It's all Bill Clinton's penis's fault.

Didn't you hear?

[C_U_L8R]

12. Well it did go up at the end

dah dum dum

[TheLastMohican]

4. According to Reuters

Central banks worldwide have now injected at least US$323.3 bln in the past 48 hours to prevent markets from spinning into a global liquidity >>

Can you say "Inflation"?

[C_U_L8R]

5. George Bush can't say liquidity

but he sure can drink.

[rodeodance]

6. afp: Fed pumps 38 bln dlrs into market in biggest move since 9/11

Fed pumps 38 bln dlrs into market in biggest move since 9/11

http://news.yahoo.com/s/afp/20070810/bs_afp/stocksusbankeconomy_070810184559;_ylt=AlmAgH31Ar38u8qRpIGspces0NUE

by Justin Cole 50 minutes ago

WASHINGTON (AFP) - The Federal Reserve pumped 38 billion dollars into the banking system Friday, marking its biggest operation since the week of the 9/11 terror attacks, as it vied to shore up the US financial system.

The US central bank acted after injecting 24 billion dollars Thursday into the market, amid sharp falls on global stock markets which were triggered by fears over the multitrillion dollar US mortgage market and a related credit crunch.

"The Federal Reserve is providing liquidity to facilitate the orderly functioning of financial markets," the US central bank said.

The Fed, which has pumped a combined 62 billion dollars into the market in two days, said it stood ready to release more money if necessary as investors ditched mortgage securities and stocks tied to the troubled housing sector.

[maxsolomon]

8. forgive the ignorance, but

how do they "inject" or "pump" money into the market?

[htuttle]

9. They probably just buy up stock through third parties

[maxsolomon]

10. probably?

does that mean that the rich are getting money for nothing?

[htuttle]

11. Well, yes, of course

That's "version 6.0 of the American Way" (to quote Steve Earle).

[seriousstan]

15. That is not what is happening. The Feds are not buying stock through 3rd party.

Educate yourself......

http://biz.yahoo.com/ap/070810/fed_liquidity.html?.v=16


Google is your friend

[htuttle]

16. Okay, I read that -- am I missing something?

The Fed uses the money to provide discount loans to banks, who then use it to cover options and what...buy stock? Provide cheap loans to others who buy stock?

What did I miss?

[A HERETIC I AM]

13. Do you like to watch paint dry or grass grow? Because reading this is about as exciting....

unless of course, it fascinates you.

The simple answer to your question is they loan it to or buy securities held by banks. Directly loaning money to, or buying securities from (such as short term Treasury notes) a bank will have the same effect - supplying the bank with cash.
The long (and much more accurate) answer can be found by reading the following links;

Start with the Wikipedia page on the Fed;
http://en.wikipedia.org/wiki/Federal_Reserve_System

The Federal Reserve itself has a great site for education on how it works;
http://www.federalreserveeducation.org/FRED/?CFID=4833140&CFTOKEN=41511197

Here is the .gov site for the Fed;
http://www.federalreserve.gov/

Happy reading!

[ClintonTyree]

14. Man.....

I wish I could just print more money whenever I got in over my head in debt. Life would be so much easier.

And THANK GOD for our MBA President! You know, the one who was going to run the country like a business and be fiscally responsible? :rofl: I have to laugh to keep from crying. :cry:

[Adsos Letter]

17. He IS running it like a business....

...a fraudulent business. One that plays fast and loose with all the standards of a well run business...with an eye to simply going out of business when things go bottom up...and re-opening under a new name.

Wonder what kind of new names they are considering for the U.S. ?

[capi888]

18. This ain't nothin yet!!!

Just wait til' the credit card loans go belly up....on top of the foreclousers...which has only started. Did ya buy a mattress yet!!!

We are on a rollacoaster ride, that doesn't look like its gonna stop.

[cliss]

19. Ok: I'm assuming that this article was posted

after the stock market close on Friday. After the analysts / traders / Fed people had a chance to sit back.......and SWEAT.

If there was a group of people going through a thermonuclear meltdown over the weekend, it's the
Bankers
Fed
government officials
stock market traders
other mortgage lenders
foreign bankers

In essence, anyone who has anything to do with money. They are gulping down big swigs of pure Caribbean rum as we speak. The fact that all this happened on Friday afternoon bodes extremely poorly for Monday morning.
Especially since it didn't quell the storm.

Reason: it's not about lack of money, or lack of interest. It's a different problem, and it's something the Fed can't fix.