$25b dumped by the fed to shore up BANKS... but

[radfringe]

not one red cent for children healthcare or infrastructure repair

can we please freaking impeach the bastards now?

[C_U_L8R]

1. Anybody seen Neil Bush lately ???

this story sounds too familiar

[radfringe]

3. imagine how much the banks could be shored up and the markets

propped up, and bush/cheney corporate bail-outs could be done if we hadn't invaded/occupied iraq


http://www.comicssherpa.com/site/feature?uc_comic=cscwc

[Javaman]

41. I was thinking the exact same thing. nt

[DemocratSinceBirth]

2. The Fed Exchanged Money For Mortgage Backed Securities

It's arcane economic stuff... They do similar transaactions all the time... Somebody smarter than me in Economics can explain it...

And $25 b is literally less than a grain of sand at a beach....

[radfringe]

4. 1/2 a grain of that sand would go a long way

to help repair infrastructure, provide healthcare etc...

[sandnsea]

6. free market my ass

People have been complaining about these predatory lenders and these deceptive loans for years. Oh no, let the market work, buyer beware, bla bla. But now we're supposed to bail out the lenders who knew exactly what they were doing, and let the people they screwed end up homeless. How can you justify that?

[DemocratSinceBirth]

7. Did I Justify It?

I just stated an economic fact:



The Federal Reserve System controls the size of the money supply by conducting open market operations, in which the Federal Reserve lends or purchases specific types of securities with authorized participants, known as primary dealers, such as the United States Treasury. All open market operations in the United States are conducted by the Open Market Desk at the Federal Reserve Bank of New York, with an aim to making the federal funds rate as close to the target rate as possible. For a detailed look at the process by which changes to a reserve account held at the Fed affect the wider monetary supply of the economy, see money creation.

The Open Market Desk has two main tools to adjust monetary supply: repurchase agreements and outright transactions.


Repurchase agreements
To smooth temporary or cyclical changes in the monetary supply, the desk engages in repurchase agreements (repos) with its primary dealers. Repos are essentially secured, short-term lending by the Fed. On the day of the transaction, the Fed deposits money in a primary dealer’s reserve account, and receives the promised securities as collateral. When the transaction matures, the process unwinds: the Fed returns the collateral and charges the primary dealer’s reserve account for the principal and accrued interest. The term of the repo (the time between settlement and maturity) can vary from 1 day (called an overnight repo) to 65 days, though the Fed will most commonly conduct overnight and 14-day repos.

Since there is an increase of bank reserves during the term of the repo, repos temporarily increase the money supply. The effect is temporary since all repo transactions unwind, with the only lasting net effect being a slight depletion of reserves caused by the accrued interest (think one day of interest at a 4.5% annual yield, which is 0.0121% per day). The Fed has conducted repos almost daily in 2004-05, but can also conduct reverse repos to temporarily shrink the money supply.

In a reverse repo, the Fed will borrow money from the reserve accounts of primary dealers in exchange for Treasury securities as collateral. At maturity, the Fed will return the money to the reserve accounts with the accrued interest, and collect the collateral.


Outright Transactions
The other main tool available to the Open Market Desk is the outright transaction. In an outright purchase, the Fed buys Treasury securities from primary dealers, such as the United States Treasury, and finances the purchases by depositing newly created money in the dealer’s reserve account at the Fed. Since this operation does not unwind at the end of a set period, the resulting growth in the monetary supply is permanent. That is to say that the principal growth is permanent but a yield on maturity of the security is still charged this is usually at 12 - 18 months on outright transaction.

The Fed also has the authority to sell Treasuries outright, but this has been exceedingly rare since the 1980s. The sale of Treasury securities results in a permanent decrease in the money supply, as the money used as payment for the securities from the primary dealers is removed from their reserve accounts, thus working the money multiplier (see Money creation) process in reverse.

On Outright Transactions the Desk selects bids with the highest prices (lowest yields) for its sales, and offers with the lowest prices (highest yields) for its purchases.

http://en.wikipedia.org/wiki/Federal_Reserve_System

And that's why I suggested the poster consult a poster that is more learned in Economics than me...

Now that I dispensed of that you don't have to be Keynes or Stiglitz to know if the stock market tanks, people can't pay their home loans when they readjust and are thrown out of their homes, and the banking system implodes it won't be good for John Q. Public...


on edit -how can you justify accusing me of saying things I never said... Where did I suggest that people who lose their homes deserve what they get?

Nowhere...

[TahitiNut]

28. Interventionist in a "free market"? When the Fed takes a "long" position, they inflate markets.

The posture of "risk" justifying profit is eroded by such acts. It's welfare to the wealthy, nothing less.

[bullwinkle428]

5. And I'm sure Fox News is just one huge outrage-fest today

over this federal bailout of sorts...NOT!!!!!

[SoCalDem]

8. The EU dumped even MORE than that

and according the the BBC broadcsst I heard in the wee hours this AM, they are very OPENLY "blaming" the US "sub-prime" lending....One reporter said this could lead to a world-wide recession..

A very few super rich at the top ,could once again send the world into panic mode, when it relates to the money supply and the everyday lives of the general population..

[DemocratSinceBirth]

9. So Did The Japanese

It's arcane stuff but the way I understand it you have a lot of ARMS readjusting soon... A trillion dollars worth of them...The further you can push down interest rates the better chance people will be able to refinance their ARMS at rates they can afford... If not you are going to have massive foreclosures... That's not good...

[SoCalDem]

11. The medicine will eventually HAVE to be taken..

This is all greed-driven..pure and simple..

Housing market maxxes out? simple..lower interest rates and come up with wacky home-buyer schemes to entice poorer and poorer people to buy houses they should NEVER be buying..

Hey it's all good, though.. The carpenters and carpet-layers and patio-pourers keep working, and can buy those "zero-down" cars & get more credit cards to use at the mall...

and the big homebuilder corporations can keep leveling farmland all over and putting in more suburban shopping centers..

They all "knew in their bones" that this could not continue, but like all good pyramid schemes, they have to keep sucking more and more in, to pay off the others..

The trillions that will come "due" ..?? Most of it will never get "paid", because the people who basically rented houses above their means for a few years, just cannot afford to pay it..They will just walk away from their "dream house", with their bad credit in even worse shape, but having lost very little of "their money"..

[DemocratSinceBirth]

13. Where Will These People Go If They Lose Their Homes?

And when people loses their homes it will drive down the prices of people who can keep their homes and for most Americans that's the only equity they had...

In many cases these loans were made to struggling folks, the very folks whose causes we are supposed to be championing...

I am not nearly wise enough to have a solution but I don't want to see folks lose their homes...

And as Keynes said "in the long run we will all be dead."

[SoCalDem]

18. In my city, there has been an UNPRECEDENTED increase in

apartment complex building.. Cannot convince me that this was not "part of the plan" too..We marveled as emply space after empty space started filling up with massive apartment complexes.. Ithe "somewhere to go part"?..)

[hatrack]

35. Watch September - November this year

Particularly September - huge numbers of ARMS will reset next month.

[ORDagnabbit]

10. heres a good primer to watch

www.moneyasdebt.net

[BlooInBloo]

12. I said a week ago that if they're gonna bail em out, they should do so....

... in the form of paying 1/2 the notes on all the subprimes. That way the banks/note holders get their money, and the people get to keep their homes.

But nooooo.....

[DemocratSinceBirth]

14. If You Can Lower The Interest Rates Enough That Would Help Too

And you do that by pumping money into the system...

This will eventually cause inflation but it's better than folks losing their homes...

[BlooInBloo]

15. Making money cheap is what got us into this mess.

[DemocratSinceBirth]

17. If Nothing Is Done

If nothing is done a lot of folks will lose their homes... Folks with ARMS and interest only loans were paying anywhere from 1.7% to 4.0% interest rates and now will have to pay 7% and 8% and higher...

[BlooInBloo]

19. Doing nothing, and making money cheaper are not the only two options. lol!

[DemocratSinceBirth]

23. I Am Sure There Are Other Options...

But making money cheaper would sure help...Easier to go from a 3% mortgage to a 5.7% mortgage than to a 7% or 8% mortgage...

[SoCalDem]

22. Inflation is better?? How old are you??

That's the WORST thing..Prices still go up, but your money is worth less and less.. NOT a solution.. I've lived through too many cycles of inflation/recession, rinse & repeat..

Of course, in reality we already HAVE inflation..the grand poobahs just switched the way they record and measure it, so they keep saying it's low,but anyone who grocery shops, knows it's a a lie..

[DemocratSinceBirth]

24. Then What's Your Suggestion

eom

[sandnsea]

27. A moratorium on rate adjustments

So the market can calm down and people can continue to pay their monthly payments.

[DemocratSinceBirth]

31. How

Banks have made interest only loans at 1% or 2% and ARMS at 3% and 4% but also are paying people 4% and 5% interest for their money market and certificate of deposits ...

How can they pay out more than they take in and stay in business...

Even if you don't give a rip about bankers how about the depositors... Many people live on the interest from their certificates of deposits?

[SoCalDem]

33. Our government only cares about the speculators..not the planners

I cringe every time I hear them praise saving..and do nothing to encourage it..

[sandnsea]

34. Not the only source of income

and there are still plenty of traditional mortgages. My dad was getting less than 3% on his CD for years. Boohoo.

They're creating their own crisis.

[DemocratSinceBirth]

38. I Want To Help Your Father

http://www.money-rates.com/cdrates.htm

Lots of cd rates>>>> 3%


Your welcome

[sandnsea]

39. Well he's dead now

He should have bought gold, but was too nervous about it and stayed with CDs. At the time, that's what they paid. So if that were the rate again, oh well.

[SoCalDem]

32. Unfortunately, we have to "hit bottom", and climb back up

like we have done in the past,.,...many times.. It hurts, and no one wants to do it, so politicians keep giving us lies and quick non-fixes, until they finally admit they are useless..

We fall..

we start over ..this time with more regulation, and promises to "be better"..and a few decades or so later, after the scumbags have whittled away at the protections, we are right back where we are now..

It just works this way..it HAS to.. wealth piles up in good times , and scoundrels have to come up with schemes to grab the money and run.. everyone else gets left holding the bag..scoundrels get rich..

It's just what they do.. we stockpile money, they steal it..

When the "markets tank", those 401-ks we were all suckered into , won;t be worth much, now will they? That's part Two..wait for it.. It won't be pretty..

[mohinoaklawnillinois]

16. Just heard on CNBC that the Fed has intervened for the 3rd time

today..

:wtf: Have they ever done anything like this in the past. Injecting "liquidity" three times in one day???

According to the talking heads on CNBC, gold is selling like crazy as well..

What I know about the markets and economics you could put on the head of a pin, can someone explain this to me like I was 6 years old???

[DemocratSinceBirth]

20. Gold Is Supposed To Be A Hedge Against Inflation

When the price of gold goes up that's an indication that there is economic uncertainty...

Now that we dispensed with that I don't see the fetishization of gold... You can't eat it, drink it, or live in it...

I guess the thinking is that gold is tangible and therefore valuable...


The Fed is pumpimg liquidity into the system to put more money into circulation... Presumably the more money there is in circulation the lower interest rates are but if you put too money in circulation you end up with inflation; too much money chasing too few goods...

It's all a flipping game anyway... Just remember "in the long run we will all be dead."

[sandnsea]

25. in the short run, some will be homeless

No it is not a flipping game anyway.

[DemocratSinceBirth]

30. It's A Game

Life is a game...

[sandnsea]

42. Oh boy

I just won all your money. I'll PM you my address. I decided I make today's rules to the game. What do you care if you're broke, since it's all a game.

[OnceUponTimeOnTheNet]

43. It's all a game. Who cares who winds up homeless or dead.

Weather the "War" or the banks get you. It's all good, right. As long as the likes of Cheney, *, Addington, et Rove get to whistle on their way to the overseas banks, it's all good, right?
sarcasm.

[Freddie Stubbs]

21. The federal governement isn't spending any money on 'children healthcare?'

Who is funding SCHIP?

[sandnsea]

26. Bush says he'll veto it

Why doesn't he veto bailing out his bank buddies?

[Freddie Stubbs]

29. How much has Congress proposed to spend doing that?

:shrug:

[sandnsea]

36. Was that the point?

I don't think so. I think the point was what the free marketers propose. Yes, 'not one red cent' was hyperbole, I agree.

[Freddie Stubbs]

40. My point is if you are going to make an argument, get your fact straight

The Federal Reserve operates independently of the President and Congress.

[iamthebandfanman]

37. the banks run the government

havent you heard ?