So the fed and others inject 72 bill, then another 30 bill into the market...

[Javaman]

then drop interest rates by .5% and we got a sudden "surge" of 233, now it's down 25.

With all their efforts, that's the best that can happen?

what part of the "booming" economy did I miss that moron* speaks so affectionately about?

[spanone]

1. now don't put down our Katrina Economy.....junior knows best

:sarcasm:

[soothsayer]

2. how and where exactly do they inject this cash? is it newly minted?

[mudesi]

3. Yes. And they use it to purchase bonds. (nm)

[Extend a Hand]

13. in this case it wasn't bonds

The 'liquidity injections' were repo's (repurchase agreements) that are really just short term loans to banks. The term of these loans is usually 1-3 days but in this case the loan period was extended to 30 days and is renewable indefinitely.

Usually to get these loans, banks have to put up treasuries or bonds as collateral but in this case the fed accepted subprime CDO's as collateral. Some collateral, huh? Raise your hand if you think the banks will ever pay the loans.

[Squatch]

4. Yeah, that's how our fiscal system works.

Need money? Just print more!

[Robbien]

7. If you are really interested, there is a good essay

on how this system works called

The Rise and Collapse of Wall Street's House of Debt

http://agonist.org/numerian/20070819/the_rise_and_collapse_of_wall_streets_house_of_debt

It is very long, but very good. Here is a small part

To understand the accelerating financial crisis that is afflicting various global markets you have to realize there are two credit creation processes at work in the world today. The first is the traditional one run by the central banks through the commercial banking system. This process has increasingly been shunt aside in the past ten years by a new credit creation mechanism run by the Wall Street investment banks. It is this new lending machine which is now imploding, and which threatens to impose severe economic pain.

There were warning signs from the Federal Reserve itself that this parallel universe of credit creation was running out of control. About a year ago the Fed announced it was no longer publishing its M3 money supply statistic. This seemingly obscure technical matter was actually very revealing. M3 is the broadest measure of money supply and includes corporate and investment bank money stock, as opposed to M1 and M2 which focus on cash and consumer credit. The Fed was implicitly saying it no longer had control over the credit being created through the investment banks, hedge funds, and various securities markets – and that it was not going to be responsible for any problems that developed.

[mainegreen]

11. Minted in binary.

It's not even real paper cash.

(Real paper cash. HAH! As if paper cash is real).

[kirby]

5. Its time to pay the piper...

The low interest rates over the past several years fueled an unhealthy economy. It allowed cheaper capital to pursue bad business ideas, fueled extending the 'American Dream' to people who have no capability to repay or afford it, and devalued our dollar. At some point in history, perhaps now, there will be the perfect storm. We've already got issues with China, high oil prices, failing mortgage companies, a large number of people who refinanced to adjustable rate mortgages (with little, no, or negative equity), and a pathetic savings rate.

A correction is certain. Most likely the Dems will get blamed for it. Personally, I cashed out of the stock market when Bush was reelected. A major thing that is fueling this economy is the Iraq spending. Normally the Fed injects money into the economy and adjusts rates to help stabilizes a correction. Those levers has already been exercised - there is little room/reserve for adjustment.

[LSparkle]

9. They're just postponing the inevitable ... no way to put a bandaid on it anymore

No "Mission Accomplished" banner or barnstorming speech tour can change this sow's ear into a silk purse (!).

[whistle]

6. The Federal Reserves injection of over $105 billion last week and the drop

....of .5% in the discount rate was ALL to help bail out keep lending institutions like CountryWide from immediate bankruptcy and to allow them time to sell off or rolland bundle bad mortgages and artificially keep Countryside's portfolio deceptively inflated and thus stock prices higher. Other financial institutions are expecting the same now.

This is all a massive bailout to the wealthy at the expense of investors and tax payers. The Federal Reserve Chairman Ben Bernanke is an idiot and he will continue to infuse more liquidity into the banks and the market as long as congress allows it and the tax payers foot the bill. The Federal Reserve needs to be stopped now!

P.S. all this policy is completely inflationary and is now moving the U.S. economy into total chaos.

[Hydra]

8. As long as the money is not being lent out

We're standing on the deck of a sinking ship. One of my Realtor friends hasn't sold anything in almost a year, and he's one of the best at his company. He spreads the money he makes all around the community to get new clients and to get business done. It's as if there is a black hole where he is now, and that will work its way from top to bottom soon.

Watch Money as Debt on Google. It explains why loans are so important to the economy.

http://video.google.com/videoplay?docid=-9050474362583451279

They all know how dangerous it is to freeze the loan market, so why are they doing it???

[Blackhatjack]

10. The real estate profession is about to be gutted ..... many have already left

From a reliable source, one real estate company in a top market reported ZERO sales in the entire office for the month of June. Zip. THey employ around 35 agents and have been around a long time.

Welcome to reality.

[Hydra]

12. That's sick!

:scared:

Sometimes I do think ignorance is bliss. I know too much now to mistake the carnage that foretells.