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CPI as if it were calculated using the methodologies in place in 1980.
Posted on 03/28/2008 10:24:39 AM PDT by BGHater
The Federal Reserve announced Friday it will auction another $100 billion in April to cash-strapped banks as it continues to combat the effects of a credit crisis.
The central bank said it would make $50 billion available at each of two auctions, on April 7 and April 21.
Through the end of March, the Fed has provided $260 billion in short-term loans to commercial banks through the innovative auction process. It also has employed Depression-era provisions to provide money to investment banks.
All the moves have been designed to cope with a serious financial crisis that has roiled U.S. and global markets and caused the near-collapse of Bear Stearns Cos., the nation's fifth largest investment bank.
The Fed has been holding auctions every two seeks since December to provide short-term loans to commercial banks. It started with auctions of $20 billion, then pushed the level to $30 billion, and in early March raised the auction amount to $50 billion as the credit shortage grew more severe.
In announcing the move to $50 billion last month, the Fed said it would continue the auctions for at least the next six months, unless credit conditions show they are no longer needed.
The auctions are just one of a series of unorthodox steps the Fed has taken to battle the current crisis. The biggest of those moves was an announcement that it was allowing investment banks to borrow directly from the Fed. Previously, only commercial banks, which face tighter regulations, had that privilege.
The Fed also said it would make available $30 billion in financing to support the sale of troubled Bear Stearns to JP Morgan Chase & Co., hoping to prevent a bankruptcy that could have rocked Wall Street.
The Fed's auctions have drawn criticism from some that the central bank, and ultimately U.S. taxpayers, could be financing a bailout for big Wall Street firms that had engaged in risky lending practices.
Fed Chairman Ben Bernanke will fact questions about the Fed's recent moves when he testifies on Wednesday before the congressional Joint Economic Committee.
While Todd may be educable, I really doubt that you are.
Someone I trust said that when you decide on a new bank, check out the rate they offer on their savings accounts. If it seems high, then it’s a good bet they’re desperate for cash and you don’t want to be in that bank :)
Maybe a good seat-of-the-pants test...
Just read the article.
It looks like what severaal at Seeking Alpha and Minyanville are saying: An AAA or alt-a person in a home that they bought for $750,000 and is now worth $550,000 suddenly finds they owe an extra $200,000 that they can pretty much count on NEVER making up.
It is better to temporarily destroy your credit than carry that the rest of your life (and they will if they don’t walk away) as, basically, indentured slavery.
In fact, once they make that realization, they should stop making payments, period. Some are doing that in Florida in homes worth over $2,000,000 and sticking around for two years or more, rent free!
Imagine taking all the money you save in monthly payment and buying hard gold with it. Even if gold goes down, your relative position is phenominal compared to what it would have been if you kept making payments for the albatros you live in.
Have a great weakend, my FRiends!!!
I agree. It becomes a business decision.
But don’t conclude for a moment that in making “loans” to banks that the Fed is paying their rent out of your pocket. OOOOPS Sorry Toddster, there I go again, slandering your friends.
At 1% interest there is little use for a bank.
One stupid reason I still have most of my money in the stock market is due to something a guy said back in the 90’s. He said something along the lines of. “real estate and the stock market compete for the same investment dollars, so if one is perceived to be a bad place to put money, the other will rise in value.” It is why I went agressive with my 401k in stocks.
IOW, although I am very bearish about the overall economy, I would not be surprised if the dow did continue to go up, but then, that would be partially because the dollars in the market would be inflated.
But I suspect everything will go down.
Until Ronald Reagan, all presidents elected on a year with a zero in its rightmost digit died in office. So some actually thougth he would too. But he didn’t.
To quote a common phrase “past performance does not guarantee future performance.”
And although many see what is happening as an unravelling of a few years worth of up-cycle, I see it as an unravelling of over 50 years of bad economic practices.
I think this may be the one that has been coming since before WWII. Key word there is “may”.
You mean, other than a checking account ?
I agree - I wasn’t proposing opening a savings account, I was pointing out a potential indicator of distress at a bank.
I love you too Sunshine.
what could go wrong?.
Where, in the article, does it say that the Fed is giving anyone anything?
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CPI as if it were calculated using the methodologies in place in 1980.
When all is said and done there will have been averted a credit crisis that, had it occurred, would have taken under many other financial entities on Wall Street and would have turned your 401(k) into a 101(k).
The loans to the dealers will be repaid, the inter dealer lending market will unfreeze and the next wave of higher stock market and home prices will begin.
LOL!
Standby for being ridiculed by the permatouts for publishing this stuff. Of course it makes you ask why Greenspan decided to stop publishing M3.
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