Friday, September 19, 2008

Billions and Billions Served

It's bad and the worst is ahead of us.
While details remain to be worked out, the plan is likely to authorize the government to buy distressed mortgages at deep discounts from banks and other institutions. The proposal could result in the most direct commitment of taxpayer funds so far in the financial crisis that Fed and Treasury officials say is the worst they have ever seen.

I swear, reading the paper this morning was like waking up in some alternate universe. The dollar amounts alone are staggering and incomprehensible.
The bailout discussions came on a day when the Federal Reserve poured almost $300 billion into global credit markets and barely put a dent in the level of alarm.

Hoping to shore up confidence with a show of financial shock and awe, the Federal Reserve stunned investors before dawn on Thursday by announcing a plan to provide $180 billion to financial markets through lending programs operated by the European Central Bank and the central banks of Canada, Japan, Britain and Switzerland.

But after an initial sense of relief swept markets in Asia and Europe, the fear quickly returned. Tensions remained so high that the Federal Reserve had to inject an extra $100 billion, in two waves of $50 billion each, just to keep the benchmark federal funds rate at the Fed’s target of 2 percent.

The Dow Jones industrial average rose 617 point during the day, the largest gain in six years. I'm glad somebody has confidence in all this. I'm not among them.
“The markets voted, and they liked the proposal,” said Laurence H. Meyer, vice chairman of Macroeconomic Advisers.

There's a very ugly truth just barely concealed beneath the surface of these bailouts. Something along the lines of us being economically screwed to oblivion.

I can hardly wait for the markets to open today. Let's see some more financial "shock and awe."

No comments: