Democratic Underground Latest Greatest Lobby Journals Search Options Help Login

Stupid Fed tricks

Printer-friendly format Printer-friendly format
Printer-friendly format Email this thread to a friend
Printer-friendly format Bookmark this thread
This topic is archived.
Home » Discuss » Archives » General Discussion (1/22-2007 thru 12/14/2010) Donate to DU
MadHound Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-08-08 09:54 AM
Original message
Stupid Fed tricks
I woke up yesterday morning to the great news that now the American people have cashed out their houses equity to the point where average equity has slipped below fifty percent, for the time since 1945. Yep, Americans now have more debt than equity tied up in their house. Not a good thing, not a good thing at all. < >

As alarming as that story was, the midday announcement by the Fed just floored me. The Fed has been desperately cutting rates the past few months in order to stave off the incoming economic tsunami, but all these cuts have done is raise inflation at exactly the wrong time. So yesterday, the Fed decided to try another stupid trick, pouring billions more into the banking sector in order to that the banks can have more money to loan. OK, loaning money to banks is fine and dandy, and the Fed is trying to stave a banking crisis the likes of which we haven't seen since the Great Depression. But the trouble is, the Fed also loosened up what they would accept as collateral. This is the really stupid part, the Fed is now going to take mortgage backed securities as collateral for these loans their making to the bank. Yes people, our government is now going to bail out the banks, and leave the government stuck with a bunch of worthless mortgages and properties. All with our tax money.
< >

It's not even the fact that the Fed will be taking over these mortgages, it is the sheer simple fact that instead a bunch of little banks failing(and even some big ones), mostly those who deserve it, instead we're quite possibly going to witness out Central Bank fail. Is anybody thinking out there? Does anybody have a clue what a stupid move this is? I was never a fan of Greenspan by any means, but at least he had the good common sense not to tie the noose around his own neck. Hell, Bernanke is not only tying the noose, but he's built the gallows and tested the trap door to go along with it.

Hang on tight folks, this is going to get really, really ugly. All those fine checks flying out from the Treasury this spring, go change them into Euros, they will hold their value much better than dollars will.
Printer Friendly | Permalink |  | Top
MannyGoldstein Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-08-08 10:05 AM
Response to Original message
1. The Fed Knows We're Fucked
Edited on Sat Mar-08-08 10:06 AM by MannyGoldstein
The dike is giving out, and they're sticking fingers in as the leaks spring up, hoping like hell for a miracle to prevent the final cataclysmic burst.

They've given up managing for the long term, now it's just day-to-day.
Printer Friendly | Permalink |  | Top
MadHound Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-08-08 10:09 AM
Response to Reply #1
2. Oh I agree with you,
But what the fuck are they thinking when they stick their own necks out for the ax? Really, if they pull in even as little as 50 billion in mortgage back securities, they're going to take a hit that they can't recover from. This just makes absolutely no sense.
Printer Friendly | Permalink |  | Top
DU AdBot (1000+ posts) Click to send private message to this author Click to view 
this author's profile Click to add 
this author to your buddy list Click to add 
this author to your Ignore list Tue Jan 23rd 2018, 01:57 PM
Response to Original message
Advertisements [?]

Home » Discuss » Archives » General Discussion (1/22-2007 thru 12/14/2010) Donate to DU

Powered by DCForum+ Version 1.1 Copyright 1997-2002
Software has been extensively modified by the DU administrators

Important Notices: By participating on this discussion board, visitors agree to abide by the rules outlined on our Rules page. Messages posted on the Democratic Underground Discussion Forums are the opinions of the individuals who post them, and do not necessarily represent the opinions of Democratic Underground, LLC.

Home  |  Discussion Forums  |  Journals |  Store  |  Donate

About DU  |  Contact Us  |  Privacy Policy

Got a message for Democratic Underground? Click here to send us a message.

© 2001 - 2011 Democratic Underground, LLC