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Joe, they think they are throwing water on the fire, but in fact they are throwing gasoline. There is little that this bailout will do so solve the systemic problems faced by this and the global economy because all it is doing is treating symptoms, not the disease.
We are witnessing the end of the DEBT STANDARD of fiat money, all fiat systems follow the same basic pattern of destruction, ours is no different. When debt becomes so massive it will begin to siphon off, gradually at first, more and more viability from the economy.
We will not see the end of this, there may be lulls, but we will continue to see economic seizure in various sectors and, perhaps the most dangerous, a hybrid depression with characteristics of both inflationary and deflationary pressures. Eventually, as this government and the FED continue to "spend" the pressures of inflation will turn to hyper-inflation and all hell breaks loose at that time.
"The liberties of a people never were, nor ever will be, secure, when the transactions of their rulers may be concealed from them."~Patrick Henry
You're probably right. I wouldn't be too surprised to see 20-30% inflation within the next two years. Looks like the dems will be left holding the bag.
We will not see the end of this, there may be lulls, but we will continue to see economic seizure in various sectors and, perhaps the most dangerous, a hybrid depression with characteristics of both inflationary and deflationary pressures.
Republicae,
Like our fascism our hybrid depression will be uniquely American. Looks like it's BOHICA time again.
BOHICA is the perfect description of the entire situation! Yeah, I am with you, I fully expect double digit inflation leading to triple digit within a few years. Additionally, there are two extremely massive bubbles that are so bloated that they will dwarf the housing bubble and that is the derivatives and the SSI bubbles. SSI is about to be hit with a massive, truly massive drain as the baby boomers press their retirement requirements on the system. As we know, since the late 80s and early 90s, the system has been on a pay-as-you-go system because the entire Trust Fund was raided by Congress and replaced by "special government securities" in other words non-marketable paper. We haven't seen anything yet...get prepared!
"The liberties of a people never were, nor ever will be, secure, when the transactions of their rulers may be concealed from them."~Patrick Henry
Put simply, the hastily crafted plan lawmakers agreed to in principle on Sunday is intended to revive jittery and fragile banks on Wall Street with enough money -- by using taxpayer funds to purchase billions upon billions of their worst mortgage-related assets -- so that lending, the lifeblood of the American economy, flows freely again.
If it is working, signs will emerge almost immediately in the interest rates on U.S. bonds and in an array of obscure -- but crucial -- financial benchmarks.
[SNIP]
Still, rising unemployment, high energy prices and falling real estate values will not disappear overnight.
"At first, there will be some sort of sigh of relief, which I'm afraid would be misplaced, because when you get through the shorter-term terror, you're left with an economic landscape that will be very fragile," said Michael Farr, president of Farr, Miller & Washington, which manages investment portfolios for people and businesses.
The financial system is blowing up. Don't listen to the experts; just look at the numbers. Last week, according to Reuters, "U.S. banks borrowed a record amount from the Federal Reserve nearly $188 billion a day on average, showing the central bank went to extremes to keep the banking system afloat amid the biggest financial crisis since the Great Depression." The Fed opened the various "auction facilities" to create the appearance that insolvent banks were thriving businesses, but they are not. They're dead; their liabilities exceed their assets. Now the Fed is desperate because the hundreds of billions of dollars of mortgage-backed securities (MBS) in the banks vaults have bankrupt the entire system and the Fed's balance sheet is ballooning by the day. The market for MBS will not bounce back in the foreseeable future and the banks are unable to roll-over their short term debt. Game over. The Federal Reserve itself is in danger. So, it's on to Plan B; which is to dump all the toxic sludge on the taxpayer before he realizes that the whole system is cratering and his life is about to change forever.
Just to get a grip on the numbers being reported there, numan, if the Smirking Chimp has correctly quoted Reuters, and if Reuters has it right, US banks borrowed a total of $940 Billion last week?
Sorry, I have to see a link to the primary source before I'm buying that swampland.
Steve
Give us the wisdom to teach our children to love, to respect and be kind to one another, so that we may grow with peace in mind. (Native American prayer)
Just to get a grip on the numbers being reported there, numan, if the Smirking Chimp has correctly quoted Reuters, and if Reuters has it right, US banks borrowed a total of $940 Billion last week?
Sorry, I have to see a link to the primary source before I'm buying that swampland.
Get out your wading boots:
Quote
NEW YORK/LONDON (Reuters) - U.S. banks and money managers borrowed a record amount from the Federal Reserve in the latest week, nearly $188 billion a day on average, showing the central bank went to extremes to keep the banking system afloat amid the biggest financial crisis since the Great Depression.
To make sense of these numbers, you must rember a few things.
The Fed is empowered to create money out of thin air.
The international credit system has seized up. Banks are hoarding their money. They are not lending to each other. In order to function from day-to-day, the banks have no recourse except to borrow from the Fed.
I emphasize the word borrow. These are loans.
Theoretically, $X out plus $X in equals $0, and does not debase the money supply. Of course, real life is much more messy.
Many of these loans are very short-term, and some or much of the money has already been re-paid to the Fed. Therefore, less money is involved than may appear at first sight. ________________
Give us the wisdom to teach our children to love, to respect and be kind to one another, so that we may grow with peace in mind. (Native American prayer)
