Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Will Fed Try Something New to Aid Markets?
Wall Street Journal ^ | 10 March 2008 | DAVID WESSEL

Posted on 03/10/2008 6:15:48 PM PDT by shrinkermd

With worsening strains in credit markets threatening to deepen and prolong an incipient recession, analysts are speculating that the Federal Reserve may be forced to consider more innovative responses -- perhaps buying mortgage-backed securities directly.

"As credit stresses intensify, the possibility of unconventional policy options by the Fed has gained considerable interest

...Since 1932, the Fed has had the authority to lend, against collateral, to individuals, partnerships or corporations other than banks in "unusual and exigent circumstances," subject to the vote of five members of the Board of Governors. (The board has seven seats, but two are currently vacant.) This power has never been used.

Mr. Feroli noted that Congress in 1966 gave the Fed temporary authority, made permanent in 1979, to purchase obligations of government-sponsored enterprises, such as Fannie Mae and Freddie Mac.

So far, the Fed hasn't purchased GSE obligations except in its short-term repurchase operations. When the federal budget was in surplus, the Fed considered outright purchases of GSE obligations, but judged against such a move as it would reinforce the perception of an implicit government guarantee.

Last week, the Fed said it would lend banks $100 billion starting this week in 28-day loans through its new Term Auction Facility, at which banks can post a wide variety of collateral, including mortgages, corporate loans and other items that have become harder to sell in the open market. And it said it would make money-market loans of as much as $100 billion to its network of 20 bond dealers for 28 days, double the usual maximum term, and structure them to encourage dealers to submit mortgage-backed securities guaranteed by Fannie and Freddie Mac.

Sen. Christopher Dodd (D., Conn.), chairman of the Senate Banking Committee, has suggested creating a new government corporation that could buy mortgage-backed securities

(Excerpt) Read more at online.wsj.com ...


TOPICS: Business/Economy; Extended News
KEYWORDS: crisis; fed; stockmarket
Navigation: use the links below to view more comments.
first previous 1-20 ... 61-8081-100101-120 ... 361-368 next last
To: Etoo
Oh lord, spare us Paulean idiots and their attempts at thought...
81 posted on 03/11/2008 3:26:05 PM PDT by JasonC
[ Post Reply | Private Reply | To 72 | View Replies]

To: Moonman62
SP500 in September 2002, 815. SP500 in September 2007, 1525. That was an 87% rise in 5 years not counting the dividends, and in excess of a 15% annual return counting them. That is a bull market. No, you don't have a right to that as normalcy, and no, it won't be monotonic, or average that fast over whole cycles including the drops, since the economy grows half that fast. But it was a bull market, as fast and as big as they generally come, and pretending anything to the contrary is simply pretending --- and ridiculous.
82 posted on 03/11/2008 3:33:26 PM PDT by JasonC
[ Post Reply | Private Reply | To 71 | View Replies]

To: JasonC
>>Oh lord, spare us

Does it answer when you pray to it?

 


83 posted on 03/11/2008 4:07:29 PM PDT by Etoo (I regret that I have but one screen name to sacrifice for my country.)
[ Post Reply | Private Reply | To 81 | View Replies]

To: Etoo
You are the gold freak, nimrod.

The identity of assets and liabilities is the basis of all accounting, which is called *double entry* bookkeeping for a reason.

The idea of a net asset is a round square and a misunderstanding. That is all.

84 posted on 03/11/2008 4:16:54 PM PDT by JasonC
[ Post Reply | Private Reply | To 83 | View Replies]

To: JasonC
[You are the gold freak, nimrod.]
 
Am I?  Where have I once advocated Gold as an investment?
 
You''re the "Bull" worshipper - Baal is its name; same today as it was 2000+ years ago.
 
Baal is a Hebrew word for which the primary meaning is "Posessor".
 

Ex 32:7-8

7 Then the LORD said to Moses, "Go down, because your people, whom you brought up out of Egypt, have become corrupt. 8 They have been quick to turn away from what I commanded them and have made themselves an idol cast in the shape of a calf. They have bowed down to it and sacrificed to it and have said, 'These are your gods , O Israel, who brought you up out of Egypt.'


85 posted on 03/11/2008 4:39:57 PM PDT by Etoo (I regret that I have but one screen name to sacrifice for my country.)
[ Post Reply | Private Reply | To 84 | View Replies]

To: Etoo
You are a Paulean, Pauleans are gold freaks, ergo you are a gold freak. Now toddle off the Mises.org and post your inane slander there.
86 posted on 03/11/2008 4:51:18 PM PDT by JasonC
[ Post Reply | Private Reply | To 85 | View Replies]

To: shrinkermd; Travis McGee; M. Espinola; Calpernia; The_Republican; TigerLikesRooster; jas3; ...
401(k)s Tapped to Save Homes !

Excerpt:

Struggling to save their homes from foreclosure, more Americans are raiding their 401(k) retirement accounts to pay their bills — and getting slammed with taxes and penalties in the process, according to retirement plan administrators.

Rather than borrow money from their 401(k) accounts, which would have to be paid back, a growing number of beleaguered families have been cashing out, plan administrators say.

This is happening even as borrowing from 401(k) accounts remains fairly flat. Fewer still are borrowing from 401(k) plans to buy homes. By contrast, new figures from plan administrators show the number of 401(k) "hardship withdrawals" is up in early 2008 compared with the same period last year.

The main reason? The need to stave off foreclosure or eviction.

Arrrgggh ! This is beyond stupid, stupid, stupid . . .
87 posted on 03/11/2008 5:48:19 PM PDT by ex-Texan (Matthew 7: 1 - 6)
[ Post Reply | Private Reply | To 76 | View Replies]

To: ex-Texan

The federal reserve just picked the pocket of the average family of 4 about $3200 to pay several million a piece to central bankers in New York who made these bad deals.


88 posted on 03/11/2008 6:01:29 PM PDT by AndyJackson
[ Post Reply | Private Reply | To 87 | View Replies]

To: JasonC
[You are a Paulean]
 
I am an American Citizen who happens to agree with Dr. Paul that the monetary responsibility, described by Article 1, Section 8, Clause 5 of the Constitution of the United States, has been misappropriated by a group of folks to whom it does not rightfully belong.
 
I desire that said monetary responsibility and authority be taken back from the Creature from Jekyll Island, and returned to the elected representatives of the Citizens of the United States - where our Revolutionary Founders intended it to be.
 
But then, you're a shill who pretends there was no fraud within the subprime industry, aren't you.  Perhaps that whole legal/illegal thing is nothing but a nuisance to you.  Truth, justice, Constitutionality.  Nothing but quaint little notions dreamed up by pesky rebellious colonists.
 
So don't let us keep you from worshiping your towering, double-entry, columns of imaginary ones and zeros, Nimrod.  Better hurry if you plan on getting them all counted before your Babylonian columns fall and your symbolic, imaginary, wealth evaporates into ether space.
 
 

89 posted on 03/11/2008 6:08:52 PM PDT by Etoo (I regret that I have but one screen name to sacrifice for my country.)
[ Post Reply | Private Reply | To 86 | View Replies]

To: Etoo
More ad hominem nonsense, directed a man you don't know from Adam and will never begin to understand. But that is par for the course with Paulean gold worshipping freaks.
90 posted on 03/11/2008 6:27:51 PM PDT by JasonC
[ Post Reply | Private Reply | To 89 | View Replies]

To: AndyJackson
No, they didn't pick anyone's pocket. Are you trying to maintain that you have a prior right to the value of any set of commodities you happen to choose to hold, remaining unchanged, whatever other economic actors choose to do? Because that position is incompatible with economic freedom in any form.
91 posted on 03/11/2008 6:29:36 PM PDT by JasonC
[ Post Reply | Private Reply | To 88 | View Replies]

To: JasonC
[More ad hominem nonsense,]
 
Ad hominem?  Surely you jest, Mr. Pot.
 
Nonsense?  Simply addressing your monotonous sales pitch:
"That was the bubble, and it was not based on fraud but on believing the transaction prices could hold" -JasonC
All those Liar Loans weren't fraud, and they had nothing to do with inflating transaction prices.  Riiight.
 
Nothing to see here. Move along. 
 
[will never begin to understand.]
 
LOL, what arrogance.  I understand the mirrors are shattering, the smoke is all blowing away; and the sheeple are no longer mesmerized, shocked, and awed, by you and your cronie's droning sirens. 
 
Soon, you might just find yourself shilling in your underwear - Let's hope it's not imaginary, as well {the horror}.
 
 
 
 

92 posted on 03/11/2008 7:45:48 PM PDT by Etoo (I regret that I have but one screen name to sacrifice for my country.)
[ Post Reply | Private Reply | To 90 | View Replies]

To: JasonC
No, they didn't pick anyone's pocket.Are you trying to maintain that you have a prior right to the value of any set of commodities you happen to choose to hold, remaining unchanged, whatever other economic actors choose to do?

Are you a financial idiot or another on the list of Wall Street shills. Yes, when the federal government creates $200B in currency and gives it to someone else, they just picked the pockets of all of us who are not in line to get any of it.

93 posted on 03/12/2008 12:54:51 AM PDT by AndyJackson
[ Post Reply | Private Reply | To 91 | View Replies]

To: JasonC
Frankly, we got off very easy in that respect - it might easily have taken 8% or more to break real estate speculation. As it is, the level was low and the stay brief. Nobody who paid or lent on the nosebleed prices for housing can blame anybody but themselves. They were transparently insane for two years running.

Actually you sound quite reasonable, and you seem to understand where things went and are going. I am not sure why you have a beef with the folks around here who argue for sound money, be it a gold standard, or just keeping a lock on the Federal Reserve Printing Press.

94 posted on 03/12/2008 1:02:34 AM PDT by AndyJackson
[ Post Reply | Private Reply | To 18 | View Replies]

To: AndyJackson
I am neither. I have simple analyzed the typical Austrian argument and claims to a greater depth than anyone you have ever met, and only Hayekian concern for economic liberty survives the procedure. The typical screeches against banking as all a counterfeiter's plot, does not, and instead can be proved to be (1) an economic misunderstanding on Mises' part and (2) as a piece of political rhetoric, indistinguishable for the worst socialist exploitation theory nonsense or the typical ignorant screeds against usury.

You have no prior right for any basket of commodities you freely choose to hold, remaining unchanged in value, through all the free actions of other economic actors. There is economically no difference between what happens to the purchasing power of dollars you freely choose to hold and what happens to the value of wheat or the value of DRAM memory chips, as producers and consumers toss them about in their waves of demand.

You are not forced to carry money balances in the form of bank debts in the first place. You can hold commodities, you can hold portfolio investment, you can hold foreign exchange. If instead you choose to hold bank debt, it is because doing so performs real services for you, which outweigh, for the amounts you choose to hold, any loss from dimunition of its value through time. Your demand that in addition to these "externalities" running in your favor, its free market purchasing power also remain unchanged (or increase) is no more legitimate than a workers demand that he should be paid more until his employer's profits disappear.

And the proof is the same, the test of making a market or taking both sides of the transaction condemned. If issuing bank debt is such a great deal that we are fools to stand it and it is all for the benefit of nefarious bankers, then be a nefarious banker. It is easy as pie, just buy bank stock instead of bank debt. You can do so without even paying the slightest commission, these days, and down to infinitessimal amounts, at perfectly fair market prices, etc.

In the long run, it is true that bank stock has returned more than bank debt. But it is also true that it does so while also being vastly riskier. To take a recent headline case, those nefarious bankers holding Citicorp common over the last 9 months have lost not 4% of their purchasing power, but 60% of it. You are free to join them in their game so rigged that it amounts to counterfeiting.

If you don't even after this has been pointed out to you, it is because your pretense that they can pick your pockets is a conscious falsehood on your part. In fact, you are in no way oppressed in the matter.

As for being "in line" for federal handouts, first the Fed isn't simply the government though it works for it, second, last I checked the government was handing out a giant stimulus package to precisely the sorts you pretend aren't in line, and third, you can get in line with Citi et al before the day is out, if you put your money where your mouth is. But you may find the ride in bank *stock* a trifle bumpier than the ride in bank *debt*.

Which you choose to hold being entirely up to you, you are entirely responsible for any changes in purchasing power you may or may not suffer or benefit from, as a result of your choice.

Trying to forbid others from actions that might change the purchasing power of any set of commodities you pick out, on the other hand, requires restricting the economic freedom of others - here, the freedom to engage in credit transactions, because there is no difference between the consequences of the fed creating more money and private banks doing so under a private bank system with credit freedom - and that game isn't worth the candle, for reasons Hayek explained at length in Road.

The economic error of Mises, incidentally, is his belief that it is possible to destroy the effects of gratuitious credit by a government edict or monetary law. The cycle is a permanent result of free action under capitalism and not a result of a specific legal framework for money. It isn't removable without destroying the capital market freedoms that give rise to it.

We can have better and worse monetary policy under the present fiat money system, or under commodity money systems or mixed ones. But we'd still have a cycle, and Mises is simply wrong about the matter. And we'd still have fluctuations in the exchange value of goods held as money. All of the "picking pocket" rhetoric is deeply irresponsible, and unjust to actual financiers. Frankly it is the modern form of jew baiting and denunciations of usury, and no one with either an ounce of respect for capitalism, or a classically liberal bone in their body, should engage in it.

95 posted on 03/12/2008 7:31:56 AM PDT by JasonC
[ Post Reply | Private Reply | To 93 | View Replies]

To: JasonC
The economic error of Mises, incidentally, is his belief that it is possible to destroy the effects of gratuitious credit by a government edict or monetary law. The cycle is a permanent result of free action under capitalism and not a result of a specific legal framework for money. It isn't removable without destroying the capital market freedoms that give rise to it.

I cannot believe that you are arguing that what has been going on under Greenspan and now Bernanke is "free market" capitalism and what we are seeing is just the effect of markets doing what markets do. Apparently, you are one of those who do not believe that the gratuitous expansion of credit was a deliberate act under the control of the federal reserve.

Fine. Please explain why we even bother with this apprently powerless entity called the Federal Reserve when everything we see is "just" the actions of the markets. If the Federal Reserve is irrelevant, then why does their announcement of $200B in longish term loans cause the market to jump?

96 posted on 03/12/2008 7:59:41 AM PDT by AndyJackson
[ Post Reply | Private Reply | To 95 | View Replies]

To: AndyJackson
Yes, when the federal government creates $200B in currency and gives it to someone else, they just picked the pockets of all of us who are not in line to get any of it.

The Fed is not creating $200B in currency. They are swapping, on a temporary basis, $200B of Treasury securities (which the Fed did not just create either) for other, less liquid securities. It's not a free giveaway and it doesn't pick your pocket.

97 posted on 03/12/2008 8:01:22 AM PDT by Toddsterpatriot (Why are protectionists so bad at math?)
[ Post Reply | Private Reply | To 93 | View Replies]

To: JasonC
If issuing bank debt is such a great deal that we are fools to stand it and it is all for the benefit of nefarious bankers, then be a nefarious banker. It is easy as pie, just buy bank stock instead of bank debt..

To be a "nefarious banker," I need to have my own packed board of directors vote me a $100M pay package when I tank the stock because of bad loans.

98 posted on 03/12/2008 8:04:27 AM PDT by AndyJackson
[ Post Reply | Private Reply | To 95 | View Replies]

To: Toddsterpatriot

LOL!


99 posted on 03/12/2008 8:04:55 AM PDT by AndyJackson
[ Post Reply | Private Reply | To 97 | View Replies]

To: shrinkermd

Yep, let’s just build up that “House of Cards” even higher.


100 posted on 03/12/2008 8:06:40 AM PDT by dfwgator (11+7+15=3 Heismans)
[ Post Reply | Private Reply | To 1 | View Replies]


Navigation: use the links below to view more comments.
first previous 1-20 ... 61-8081-100101-120 ... 361-368 next last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson