John Galt:
"Christopher Helms" <Chrishelms132@[EMAIL PROTECTED]
> wrote in message
news:1a1d7aef-1c8c-49d4-bee5-e5b506ff87c9@[EMAIL PROTECTED]
Mar 11, 3:46 pm, stuff_st...@[EMAIL PROTECTED]
wrote:
> On Tue, 11 Mar 2008 13:30:17 -0700 (PDT), perrie
>
> <perryneh...@[EMAIL PROTECTED]
> wrote:
> >We'll see if it continues tomorrow, won't we?
>
> http://biz.yahoo.com/ap/080311/wall_street.html
>
> Dow Jumps More Than 400 Points After Fed, Other Central Banks Move to
> Ease Credit Crisis
>
> NEW YORK (AP) -- Wall Street finally found a reason for a huge
> rally>Tuesday, after the Federal Reserve said it plans to pump $200
> billion
>
> into the financial markets to help ease the strain from the credit
> crisis. The Dow Jones industrial average shot up more than 416 points,
> its biggest one-day point gain since July 24, 2002.
>
> The Fed's program is part of a worldwide effort to help struggling
> banks and mortgage providers. The Fed -- acting in concert with the
> European Central Bank, the Bank of Canada and the Swiss National Bank
> -- agreed to loan investment banks money in exchange for debt,
> including slumping mortgage-backed securities.
>
> The move is meant to essentially create a market for assets that
> investors have been too scared to buy. That freeze-up in demand had
> sent asset values plunging and caused huge losses for some of the
> world's biggest banks.
> .. .
>
> "It's not just a rate cut. I think it's a very creative way to do
> financing," Conroy said. "It shows the Fed is willing to do things
> that are a little out-of-the-box to shore up credit issues. I really
> think they went to the heart of the issue."
>
> **** - a $200 billion bailout? Who's going to get the tab for this?
>
> And why is the fed saving the markets? It's charter is to manage
> employment and inflation.
The Fed isn't saving the markets. It is saving the banks, or trying to
by continuing to flood the banking system with extremely cheap,
inflationary dollars. The idea is to get the banks to start loaning
money again. The banks who the Bush administration has been taking a
1920s, Calvin Coolidge style approach to. Like in the 1920s, the Bush
administration allowed the banks to run free, free, free. They
encouraged the Fed to pursue a loose money/ cheap credit policy just
like in the 1920s. Hell, they even wanted the banks to be allowed to
start playing the stock market again. Then, just like in the 1920s,
the banks went overboard, over extended themselves and got into
trouble. In the 1920s it was loaning easy money to stupid people so
they could buy stocks they couldn't afford on huge margins. You were
fine as long as your stock kept going up, which it failed to do around
October of 1929. The loans went bad and the banks got stuck when the
market corrected and suckers-I mean investors- suddenly couldn't make
margin calls. This time it was loaning money to stupid people to buy
houses that they couldn't afford. The loans were fine as long as the
housing market kept going up, which it failed to do. People suddenly
owed more on their houses then the houses were worth. Then, just like
in the 1920s, the banks went almost overnight from a loose, easy
credit stance to an almost no credit stance. They got stuck with all
sorts of bad debt and the proud, mature, independent, lassais faire
banks went crying to the government to bail them out as though the
taxpayers had some fiduciary responsibility for the well being of the
banking industry. **** the banking industry. They got themselves into
this mess, they can get themselves out. That's the position an actual
conservative would take. "Oh, the government must help or some of the
nations biggest banks will fail." Good. Let them fail. It will be a
lesson to the others the next time they start getting all tingly in
the crotch about giving credit to morons just because some brain dead
administration thinks it's the right, conservative thing to do.
***
In 1929, the Fed attempted a TIGHT money policy after the October
correction, an action which is generally considered to (along with some
other poorly thought out goverment policies) have turned a necessary
correction into a full blown Depression.
What the Fed is doing now and what they did then could not be more
different.
JG
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