Ten Days That Changed Capitalism

[superconnected]

Source: Wallstreet Journal

The past 10 days will be remembered as the time the U.S. government discarded a half-century of rules to save American financial capitalism from collapse.

On the Richter scale of government activism, the government's recent actions don't (yet) register at FDR levels. They are shrouded in technicalities and buried in a pile of new acronyms.


But something big just happened. It happened without an explicit vote by Congress. And, though the Treasury hasn't cut any checks for housing or Wall Street rescues, billions of dollars of taxpayer money were put at risk. A Republican administration, not eager to be viewed as the second coming of the Hoover administration, showed it no longer believes the market can sort out the mess.

"The Government of Last Resort is working with the Lender of Last Resort to shore up the housing and credit markets to avoid Great Depression II," economist Ed Yardeni wrote to clien


Read more: http://online.wsj.com/article/SB120657397294066915.html?mod=yhoofront

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May be the scarriest moves of the bush administration.

[swag]

1. Interesting article. It's amazing to me, though, that anybody wants Ed "Y2K" Yardeni's

opinion about anything, though, since he predicted Y2K would cause a worldwide recession and then later predicted that the US invasion of Iraq would bring the price of a barrel of oil below $30.

[JackRiddler]

19. They should go to Jim "NO NO NO" Cramer instead

;)

(The NO NO NO refers to Cramer's advice on whether to sell Bear Stearns stock the Tuesday before it collapsed: "No! No! No!" he said, stressing that it's a great buy.)

[maddezmom]

2. Investment firms tap Fed for billions By JEANNINE AVERSA, AP Economics Writer

Investment firms tap Fed for billions By JEANNINE AVERSA, AP Economics Writer
3 minutes ago



WASHINGTON - Big Wall Street investment companies are taking advantage of the Federal Reserve's unprecedented offer to secure emergency loans, the central bank reported Thursday.

Those firms averaged $32.9 billion in daily borrowing over the past week from the new lending facility, compared with $13.4 billion the previous week. The program, which began last Monday, is part of the Fed's effort to aid the financial system.

On Wednesday alone, lending reached $37 billion.

The Fed, for the first time, agreed on March 16 to let big investment houses temporarily get emergency loans directly from the central bank. This mechanism, similar to one available for commercial banks for years, will continue for at least six months. It was the broadest use of the Fed's lending authority since the 1930s.

Last week, Goldman Sachs, Lehman Brothers and Morgan Stanley said they had begun to test the new lending mechanism. The Fed does not release the identity of the borrowers using the facility.

more:http://news.yahoo.com/s/ap/20080327/ap_on_go_ot/fed_credit_crisis;_ylt=Aqj0sr7.DDtHWkMynMlNSnoNJ_wE

[Supersedeas]

8. thanks for the link

[nodehopper]

9. wouldn't that create more panic? like, hoarding?

[Muttocracy]

3. but, I thought they believed in free markets, small government..... nt

[Cant trust em]

11. not when their asses are on the line. nt

[NM Independent]

4. This is among the worst things the Bush Admin. had done

Rec this for the love of God

[Supersedeas]

10. but Mukasey is focused on Democratic corruption whereever he can allege it

[Betsy Ross]

5. K&R! n/t

[Demeter]

6. FIRST They Discarded 50 Years of Rules, THEN When It All Blew Up

in their faces, they shoveled dollars onto the burning pyre.

[kimmerspixelated]

7. Furthermore, they won't find anyone to bail them out.

Worldwise, everybody hates us. Can't go asking allies that are laughing behind our backs for some money.

[Demeter]

14. I Wish It WERE Fitzmas Again!

That was the last tiem I felt hopeful.....

[Mountainman]

12. Now I know why the right believes in deregulation. They can make a killing in the short term,

get into trouble and the government bails them out allowing them to keep the money. Smart hey?

[David__77]

13. No one in power really believes in the "free market."

That's a total myth much more moribund than the Soviet conception of "planned economy." The reality is that planning and market forces are a mutually dependent whole. We have a state/monopoly economic system, and these financial "rescues" are integral to its function.

[Demeter]

15. In a Free Market, These Parasites Would Die of Starvation!

[David__77]

16. Or they would rule everything.

I'm afraid that in the absence of regulation, monopolist forces would achieve complete hegemony. Of course, monopoly is the antithesis of "free market." In other words, competition is premised on the notion of anti-monopoly public policy.

[Demeter]

17. My Idea of a Free Market Includes the Code Duello

I'm having a very bad week in a very bad year....

[Mnemosyne]

18. KnR for more visibility.. n/t