posted on Sep, 27 2008 @ 07:04 AM
the relief package, or TARP, or bailout is shortsighted
but i'd like to present further facts, to decide just what is the real stature of this fund.
During the week of 15 - 19 sept, numberous Banks & Financial Institutions went to the Fed Window and borrowed $938.75billion
During the prior months, these Banks & Financial Institutions
went to the Fed Window and borrowed more than $400billion
The Fed has been taking the banks toxic-paper and other assets
as collateral for these longer than 30 day loans (the Fed obliged
these cash strapped banks with loan extensions, possibly 90 days
or even longer for some.)
so...we have the fact that the bad collateral totaling more than $1.38Trillion
which was supposed to be freezing up the credit creation market,
has been put into a Federal Reserve pool for the time being.
which in effect makes the Fed itself a whole lot poorer, by holding all this unmarketable securities.
On top of the already sequestered $1.38Trillion from the banks etc,
the Fed is demanding another immediate $700billion, with no questions, and no accountability (see the ATS thread about the 32 words that are
verbotten to be publicized)
which is needed (we are told) to free up the mortgage-related-securities, and to free up the credit creation market.
~thought~ the credit market is made available by all banks willingness to make credit available, credit for both Main Street and credit between
If the already $1.38 trillion spent on liquidity for the banks
If the demise of several banks, along with the erasing of their debts
...if both those factors hasn't helped credit markets to unfreeze,
and banks to loan again--both to Main Street and to each other,
i scratch my head how another $700billion will suddenly open the floodgates.
As i see it, the next $700bn will be swallowed up, the banks will not start lending to Every-man USA, but will only lend to the very best customers
and at a high interest rate (say Libor +10%)
or- as an alternative--- the Fed will take that $700bn, and buy the toxic, complex-securities that are clogging the operations of the 4-5 select
Primary-Dealer banks, which the Fed has determined need to survive for the US economic engine to continue running.
~~however, even these banks/financial institutions, even with clean balance sheets can still hoard the money and not free up the credit markets or buy
back any of that bad paper (that the $700bn relief program bought)
? are we engaged in the equivelent financial war of gog-magog that precedes a financial battle of armageddon ?
? or are they on the up-&-up, trying to rescue american capitalism ?