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As reported by the AP, "The Fed said the action is intended to "expand significantly" the cash available to financial institutions, its latest effort to relieve the worst credit crisis since the Great Depression."
This move was taken by the Fed to boost the confidence in the market and so that these financial institutions would be more inclined to loan to each other as well as business and people.
While Bush and Fed Chair Ben Bernanke have warned if the crisis persists it could plunge our economy into a deep recession. This will happen because it would make it increasingly difficult for people and businesses to borrow money.
Even before any votes were cast in congress and according to the AP, “The Fed action came hours before the House defeated a $700 billion financial bailout plan, ignoring urgent pleas by Bush and Bernanke to move swiftly.”
While I am not an expert in economics: I would like to know why the DOW did crash by that amount even when the financial markets were infused with billions of dollars in cash and without congress lifting a finger to come to the rescue.
The plan for this infusion of cash would be for the government to buy bad mortgages, dodgy debts held by banks and getting the rotten assets off of their books. The plan was also would be so that banks would be in a better position to raise capital and boost lending.
The AP also reported: "All told, the total amount of cash loans — 84-day and 28-day — available to banks will double to $300 billion from $150 billion, the Fed said. Moreover, the Fed made an extra $330 billion available to other central banks. That boosted to $620 billion the total amount available to the central bank through currency "swap" arrangements, where dollars are traded for their currencies. That total is up from $290 billion previously being made available through such arrangements."
So, when congress reconvenes to hammer out a new deal will more tax payer money be infused into a battered market. If so, how much more? Will the final cost be well over $1 trillion dollars if you add both figures together?
In reading this plan, no mention was made of helping Main Street America as many Americans are in danger of losing their homes due to foreclosure. It seems to me that this government Bush and Bernanke in particular are rewarding banks for bad behavior.
What should alarm everyone especially those who are hurting during this financial crisis is that the AP reported included in this swap arrangements are the Bank of Canada, the Bank of England, the Bank of Japan the European Central Bank and other foreign banking industries.
While Bush pleaded with congress by saying, "But the reality is we are in an urgent situation and the consequences will grow worse each day if we do not act." Well Bush and Bernanke did act yesterday and the stock market is making somewhat of a rebound.
Republicans and McCain to be specific are all about deregulation and believe in the free-market system, well maybe we should let the markets be free to make these mistakes. Maybe by making these repeated mistakes, people mainly congress and the next president can call for reforms on Wall Street and hold these CEOs accountable for their actions instead of rewarding them. Personally, I would like to see some of these CEOs trade their pinstripes for prison stripes as they raped the economy. Until such time, it is we the tax payer who are forced to clean up their mistakes.
There is that age-old saying, “Something smells in Denmark” and I would equally say something smells on Wall Street. If after reading this, something does not sit right with you, call your congress member who they support. Is it Wall Street or Main Street?
Author’s email address, xmjmac@optonline.net
