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NEW YORK (CNNMoney.com) -- The Federal Reserve announced Monday it will offer an unlimited amount of dollars to three other central banks in an unprecedented move to provide liquidity to the global banking system.
The U.S. central bank will lend dollars at a fixed interest rate to the central banks of England, Switzerland and the European Union, according to a joint statement from the banks.
The other central banks will be able to borrow "any amount they wish" in exchange for collateral. The goal is to flood the financial system with much-needed dollars.
The heart of the current crisis is the quadrillion plus derivative market. Roughly half of these derivatives are listed on exchanges, but the other half are on the totally unregulated, totally opaque, poorly documented and mostly naked (no reserves or collateral given to secure performance) OTC derivatives market. The subprime and Alt-A mortgage debacles, and the soon to be recognized prime mortgage debacle, are little more than a side show with what will become their one to two trillion in losses which the Phony-Fraudie nationalization and the Paulson Ponzi Plunder Plan are meant to address, albeit futilely. However, the real estate derivative problems created by these debacles have been important catalysts leading to the loss of confidence that is preventing banks from lending to one another, because these problems, like a Zippo lighter on high flame, metaphorically speaking, have lit the fuse leading to the quadrillion dollar powder keg waiting to blow any day now, and Hanky Panky and Helicopter Ben are running around like raving, corporatist, fascist lunatics trying to stomp out the lit fuse before the whole world financial system goes up in a blaze of glory.
Originally posted by Terrapop
This is firefighting by using gasoline instead of water
For some reason they want to buy just some more time IMHO.