"they would print as much money as needed to revive the nation’s crippled banking system"

[gristy]

No mincing of words in this article. f--k, man.


U.S. Plans $800 Billion in Lending to Ease Crisis

WASHINGTON — The Federal Reserve and the Treasury announced $800 billion in new lending programs on Tuesday, sending a message that they would print as much money as needed to revive the nation’s crippled banking system.

The gargantuan efforts — one to finance loans for consumers, and a bigger one to push down home mortgage rates — were the latest but probably not the last of the federal government’s initiatives to absorb the shocks that began with losses on subprime mortgages and have spread to every corner of the economy.

In the last year, the government has assumed about $7.8 trillion in direct and indirect financial obligations. That is equal to about half the size of the nation’s entire economy and far eclipses the $700 billion that Congress authorized for the Treasury’s financial rescue plan.

Those obligations include about $1.4 trillion that has already been committed to loans, capital infusions to banks and the rescues of firms like Bear Stearns and the American International Group, the troubled insurance conglomerate. But they also include additional trillions in government guarantees on mortgages, bank deposits, commercial loans and money market funds.

more: http://www.nytimes.com/2008/11/26/business/economy/26fed.html?_r=1&hp

[babylonsister]

1. We need to separate 'before' and 'after' idiot son.

I feel a change a'comin'.

[UndertheOcean]

2. Say hi to hyperinflation

[rhett o rick]

3. BINGO

[JDPriestly]

9. My view precisely: hyperinflation.

We won't see it right away, but it is inevitable considering the amount of dollars being thrown into the economy.

Buy gold.

[Ghost Dog]

11. You will likely get deflation first,

as oil, other commodities prices fall while nobody wants to buy more than the bare essentials (hence the importance of targeted Keynesian infrastructure spending to keep the wheels turning); then later you will get hyperinflation and a dollar worth very little on world markets (hence the importance of investing now in new infrastructure and technologies which will help you to be more self-sufficient, no longer needing to import most everything from outside).

Since you're headed, like it or not, towards a new kind of forced 'isolationism', you can easily make massive cuts in 'defense' spending and put to real creative work that bonus. Nobody is threatening you, only yourselves.

And, btw, by intelligently consuming less frivolous crap, you will be helping, nay, leading the effort to save the planet.

Peace.

[boozepusher]

4. It's going to suck

having to push two shopping carts while grocery shopping. One for the groceries and one for the money to pay for them.

[marketcrazy1]

5. can you say

DEPRESSION!!

[slipslidingaway]

6. Fun With Funding

This is the September article, the October article follows up on the same topic.

http://contraryinvestor.com/2008archives/mosept08.htm

"But perhaps another major issue that is not being given enough attention is the fallout consequences due to the one balance sheet not destined to shrink during this process of deleveraging we have described, and that's the balance sheet of the Federal government...

Enough of the ranting and raving. Let's get to the point. As this process plays out and the Federal government is continually forced to expand its balance sheet as an offset to the leverage contraction occurring largely throughout the remainder of the economy and domestic financial markets ahead, THE big question becomes, where will the funding for this balance sheet expansion come from and what will it ultimately cost?

...We're not preaching end of the world here. In fact, we're really not even questioning the ability of the US to procure continued foreign funding. THE critical issue looking ahead is COST OF FUNDING. At the outset we asked the question, will the US face a funding problem at some point, given that the US is beholden to foreign financing? It's the cost of funding that will be key to forward outcomes both in the real US economy and financial markets.

In the past we have suggested that perhaps THE most important chart we can think of is the long term chart of the 30 year US Treasury bond..."

[Cronopio]

10. Fun with logarithmic charts.

The part of the report where they cover the differences in the Japanese situation in the early '90s and the US in the present is fairly well stated, but the "piece de resistance" at the end about 30-year Treasury bonds has me questioning whether the reporter is trying to deceive or is genuinely unaware of what a logarithmic scale does to charted data.

Obviously, if you plot any straight-line band of data on a logarithmic chart it's going to look like it's leveling off and thinning out. It doesn't say anything about the data - it's a reflection of the measurement. Any high-school algebra student that's paying attention knows this.

[slipslidingaway]

12. Most of the long term charts that I have seen are on a log scale,

but I know there are others who use linear charts. I think the idea of rates being as low as they have been in the future is something we need to monitor.

[Oregone]

7. "print as much money"....We have to destroy the village to save it!

[Iggo]

8. Reminds me of an addict I used to do business with.

He'd get a couple of 8balls of good shit and his life would spiral down, down, down to the bottom. Then he'd swear if he could just get about ten times more good shit, somehow his life would magically turn around, instead of getting ten times worse.

Not saying it's the same thing. Just saying that's what it reminds me of.