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In reply to the discussion: Matt Taibbi's truthiness analyzed [View all]Octafish
(55,745 posts)EXCERPT...
But something like this position was on display last week when the Federal Reserve criticized reports claiming that the total size of its emergency facilities was $7.77 trillion. The Fed argued that these reports overstated the size of the facilities because they added up all the loans extended despite the fact that many were short term loans that we simply rolled over. According to the Fed, the best thing to do is look at the total amount outstanding at one one time, which was just $1.7 trillion.
Just like the guy who only had one drink
at a time.
The counter to this is that the need to keep borrowing under what are supposed to be short term facilities shows just how badly financial institutions were faring during the financial crisis.
The amount of overnight lending reflects how broken our financial system really is. A well capitalized, moderately leveraged system does not require this massive liquidity from a central bank interbank lending should be sufficient. What the data reveals is that the financial sector remains dangerously under-capitalized and overleveraged, Barry Ritholz writes at the Big Picture.
Recently, a pair of PhD students at the University of Missouri-Kansas City tried to assess the total size of the Feds commitmentsnot just loans made, but asset purchases as well. The bottom line: a Federal Reserve bailout commitment in excess of $29 trillion.
That figure has, in turn, been criticized by economist James Hamilton who argued, incredibly, that the Feds bailout commitment under one facility was zero because all the money was paid back.
CONTINUED...
http://www.cnbc.com/id/45674390
So Taibbi was off in 2003. Compared to those saying Uncle Sam turned a profit, he was sage. He also reported the truth as he knew it.