Central Banks Add Cash to Avert Crisis of Confidence

[Tippit]

Central Banks Add Cash to Avert Crisis of Confidence (http://www.bloomberg.com/apps/news?pid=20601087&sid=aBHNFmbstWcY&refer=worldwide)



The Federal Reserve, in a second day of action in concert with the European Central Bank, provided $38 billion of reserves and pledged more ``as necessary,'' in a statement unprecedented since after the Sept. 11, 2001, attacks.



How thoughtful of the Fed. They're pledging to debase my hard-earned dollars with their fiat money created out of thin-air.



The U.S. federal funds rate opened at 6 percent, a six-year high. It sank as low as 1 percent in late trading, according to ICAP Plc, after the New York Fed staged three repurchase operations, buying assets including mortgage-backed securities. The total of $38 billion, following $24 billion yesterday, was the highest amount of temporary funds since Sept. 12, 2001.



And what better people to give my hard-earned purchasing power to, than those wonderful folks in the subprime market! Don't you love the smell of bailout in the morning?



The Fed has almost unlimited ability to supply liquidity if they feel that is appropriate,'' said Alice Rivlin, a former Fed vice chairman who's now at the Brookings Institution in Washington.



Liquidity. It's such a wonderfully benign word. When I hear the word liquidity, I think of a nice warm bubble bath. I love words that make me feel good. Don't you?



Fed Chairman Ben S. Bernanke and his colleagues acknowledged in their statement that markets were ``volatile'' and risks to growth had risen. Yet they reiterated, in language used since March, that inflation was the ``predominant'' concern.



They do sound concerned, and they're taking action. What better way to fight inflation than to add three hundred and eighty billion dollars to the money supply! I sure don't know of any.



The credit-market turmoil worsened this week after European banks acknowledged their vulnerability to rising delinquencies on American subprime mortgages. In the U.S., American Home Mortgage Investment Corp. this week became the country's second-biggest home lender to file for bankruptcy.



European banks have exposure to the US subprime market? Whew. Good thing there won't be a global recession. We've got Big Ben and the Fed on our side.



President George W. Bush is getting regular updates on the markets at his family's vacation compound in Kennebunkport, Maine, White House spokeswoman Dana Perino said.

Bush's advisers ``are keeping a very close eye on all the market activity and making sure that policies are put in place to keep our economy strong and growing,'' Perino told reporters.



Ok, all of this liquidity crisis stuff was making me a little nervous. But now that Dubya is on the case, I can rest easy.

[Unsecured Coins]

good thing I stockpiled string and silver bullion like Lucus told me to!

[T.A.M.]

I have a pile 3 feet high of "AA" batteries in a cellar in the basement...lol

TAM:)

[Unsecured Coins]

I have a pile 3 feet high of "AA" batteries in a cellar in the basement...lol

TAM:)


how much of my cedar chips is it gonna take for me to get some of those batteries?

[AlanGreenspan]

Besides your usually flawed analysis ... no wait, there's no analysis here; just you making silly comments based on the ignorance you demonstrated in the other thread discussing The Fed.

Did you even understand what you read? What would you have done given hike experimented by most money markets interest rates? That seems like a signal that people are demanding more credit, why restrict it allowing the interest rate to go too high?

Please stop talking about purchasing power and erosion unless you are going to actually demonstrate such erosion using data available for everyone. Unless you have some twisted view of the world where you just spout your ignorance and it's up to people to fetch the data and educate you.

[Gravy]

Two questions:

1) I'm a little short this week. When will my share of this money clear my account?

2) When I sold my Fiat in Italy, was the Fiat money I received a bad thing?


Edit: Ooh, look at the World Business headline in today's NY Times, Tippit:

"Italian Pride Is Revived in a Tiny Fiat (http://www.nytimes.com/2007/08/11/business/worldbusiness/11fiat.html?ex=1344484800&en=3033e73ca5df19cd&ei=5088&partner=rssnyt&emc=rss)"

It's all coming together now!

http://forums.randi.org/imagehosting/879046bdc56cc1c8f.jpg
The clutch was the size of my thumb, but wasn't really necessary outside of first.

[WildCat]

2) When I sold my Fiat in Italy, was the Fiat money I received a bad thing?

It was a good move. Everyone knows that Fiat stands for "Fix It Again Tony", you'd be completely broke if you had kept that thing! But now I know why you had to walk across Europe, were you pushing your Fiat as you went?

[TragicMonkey]

I have to say I have little sympathy for people "caught" in this sub-prime mortgage stuff. Why didn't they read what they were signing? And if you can't afford to buy a house, don't buy a house. Sheesh. People these days living on their credit cards, borrow borrow borrow. If you don't have the money, don't spend the money. If you're poor, why the heck are you buying a house?

I make pretty good money for my area, but I can't afford to buy one of these ridiculously-priced houses. So I rent. "Oh, but you can buy a house for the same as you pay in rent!" No you can't, not here. "Oh, but it's just wasted money!" How so? I have a place to live, that's not a huge debt burden around the neck of my finances, and if I get tired of it I can ditch it for somewhere else.

[The Central Scrutinizer]

I have to say I have little sympathy for people "caught" in this sub-prime mortgage stuff. Why didn't they read what they were signing? And if you can't afford to buy a house, don't buy a house. Sheesh. People these days living on their credit cards, borrow borrow borrow. If you don't have the money, don't spend the money. If you're poor, why the heck are you buying a house?

It goes something like this (M = Moron, SPL = Sub-Prime Lender, BHL = Bleeding Heart Liberals):

M: I can't afford this $150,000 house. My payments would be $1,000/mth

SPL: We have a program where you pay a portion of the interest dues each month, and the remaining interest is added to the principal. With this, you payments are only $333.00 a month for the first three years.

M: What happens after three years?

SPL: The payments return to normal, which assuming todays rate, would be $1,000/mth. Actually, slightly higher, because your principal due has increased instead of decreasing.

M: OK! What a great deal. I can afford a house! Where do I sign?

Fast forward three years....

M: Whaaaaaaa! My mortgage payment tripled. Whaaaaaa!! It's not fair!!!!

BHL: It's certainly not your fault. We'll blame it on evil, giant corporations. The government should bail you out!

M: You're right! Whaaaaaa!!!

[TragicMonkey]

$150,000 house?! Holy crap, that's cheap. In my part of the country, a two bedroom crap shack forty minutes from a city line is now $300,000. A decent middle-class house inside a city is going to be over $350,000. $450,000 in a decent school district.

[Gravy]

150 grand would buy one-eleventh of an average house in my neighborhood. If there are any really good engravers here, I'd like to talk with you.

[The Central Scrutinizer]

$150,000 house?! Holy crap, that's cheap. In my part of the country, a two bedroom crap shack forty minutes from a city line is now $300,000. A decent middle-class house inside a city is going to be over $350,000. $450,000 in a decent school district.

I believe you are in SF?

In the midwest, in cities like St. Louis, KC, Omaha, etc, you can still get a nice little 1000 sqft brick bungalow for that price.

[TragicMonkey]

I believe you are in SF?

In the midwest, in cities like St. Louis, KC, Omaha, etc, you can still get a nice little 1000 sqft brick bungalow for that price.

No, I'm in Hampton Roads, VA. It's a nice little collection of cities where the average salary is low but the average housing prices are through the roof.

[Tippit]

I have to say I have little sympathy for people "caught" in this sub-prime mortgage stuff. Why didn't they read what they were signing? And if you can't afford to buy a house, don't buy a house. Sheesh. People these days living on their credit cards, borrow borrow borrow. If you don't have the money, don't spend the money. If you're poor, why the heck are you buying a house?



Maybe upon further reflection you should extend some of that ill-will towards the real culprits, the Federal Reserve. The "ridiculously-priced houses" that you speak of were of course the destination for all of that new inflationary money (oops! I'm sorry, "liquidity") the Fed has been pumping into the economy for the last decade or so. The words "ridiculously-priced" imply the seller is somehow ripping off potential buyers. The reality is that it is the Fed's never-ending supply of funny money that has caused investors to bid up real estate prices. This illusion of a perpetual real estate gravy train has caused almost everyone to want to get in on the action, causing people with more greed than credit to try and flip homes, and causing greedy lenders with more of the Fed's cheap money than scruples to want to take their cut. I don't really understand the knee-jerk reaction of blaming the poor. It takes two to tango, a borrower and a lender. And it only takes one Federal Reserve to inflate the money supply and cause this mess.



I make pretty good money for my area, but I can't afford to buy one of these ridiculously-priced houses. So I rent. "Oh, but you can buy a house for the same as you pay in rent!" No you can't, not here. "Oh, but it's just wasted money!" How so? I have a place to live, that's not a huge debt burden around the neck of my finances, and if I get tired of it I can ditch it for somewhere else.

Sound reasoning, but it's too late for most people. Unfortunately, it's the subprime lenders, not the borrowers who are getting bailed out. Oh, and you're paying for the bailouts with every debauched dollar you own. Does this seem fair to you? Unfortunately, I think the media is downplaying the significance of this problem. When you stop to consider that the Fed providing all of this "liquidity" is inflationary, lenders are going to be forced to demand higher interest rates in exchange for their loans being paid off in dollars that are worth less than when they loaned them. What does this mean for the 40% of mortgage holders who own ARMs? While they may not be classified as "subprime" now, Wait and see what happens when the monthly payment they can afford now suddenly becomes unaffordable!

[Tippit]

BHL: It's certainly not your fault. We'll blame it on evil, giant corporations. The government should bail you out!

M: You're right! Whaaaaaa!!!

LoL? It's the lenders not the borrowers who are getting bailed out by the Fed, and only the biggest Wall Street banks at that. The borrowers get foreclosure and eviction notices.

Nice try though.

[The Central Scrutinizer]

LoL? It's the lenders not the borrowers who are getting bailed out by the Fed, and only the biggest Wall Street banks at that. The borrowers get foreclosure and eviction notices.

Nice try though.

This will be an issue in the 2008 election, when the Dems will promise all sorts of free handouts for these people. Because, after all, it wasn't their fault.

Watch and learn.

[Darth Rotor]

Maybe upon further reflection you should extend some of that ill-will towards the real culprits, the Federal Reserve. The "ridiculously-priced houses" that you speak of were of course the destination for all of that new inflationary money (oops! I'm sorry, "liquidity") the Fed has been pumping into the economy for the last decade or so. The words "ridiculously-priced" imply the seller is somehow ripping off potential buyers. The reality is that it is the Fed's never-ending supply of funny money that has caused investors to bid up real estate prices. This illusion of a perpetual real estate gravy train has caused almost everyone to want to get in on the action, causing people with more greed than credit to try and flip homes, and causing greedy lenders with more of the Fed's cheap money than scruples to want to take their cut. I don't really understand the knee-jerk reaction of blaming the poor. It takes two to tango, a borrower and a lender. And it only takes one Federal Reserve to inflate the money supply and cause this mess.

Sound reasoning, but it's too late for most people. Unfortunately, it's the subprime lenders, not the borrowers who are getting bailed out.
I seem to recall a savings and loan bail out about twenty years ago. Sounds really familiar.

A little over a year ago, the M3 money supply was no longer published, which it had been for decades.

I did not go with an ARM, and though I tried to refinance a few years back when rates went down a bit. I could not crack the 2% delta unless I went with an ARM and I was not going to do that. ARM's and me are a risk equation I don't care for. In the early 1990's, a few of my buds did OK with them, as interests rates dropped, but a few also got bitten.

The recent housing boom I have been eyeing with concern. I watched some of my buds get massively burned in San Diego county, early to mid 1990's, when that market went soft for a few years and they had to move.

Not pretty, throwing twenty to thirthy thousand away just to get a house off of your hands.

DR

[Daylight]

I don’t see anyone talking about the scam artists that sold these loans to these homeowners and the huge BS used to sell them. How come no one is blaming or coming down on them? They are the true bad guys here.

[Solitaire]

How thoughtful of the Fed. They're pledging to debase my hard-earned dollars with their fiat money created out of thin-air.

And what better people to give my hard-earned purchasing power to, than those wonderful folks in the subprime market! Don't you love the smell of bailout in the morning?

Liquidity. It's such a wonderfully benign word. When I hear the word liquidity, I think of a nice warm bubble bath. I love words that make me feel good. Don't you?

They do sound concerned, and they're taking action. What better way to fight inflation than to add three hundred and eighty billion dollars to the money supply! I sure don't know of any.

European banks have exposure to the US subprime market? Whew. Good thing there won't be a global recession. We've got Big Ben and the Fed on our side.

Ok, all of this liquidity crisis stuff was making me a little nervous. But now that Dubya is on the case, I can rest easy.


The Federal Reserve is doing it's job. It provides liquidity precisely when the market doesn't and in so doing it reduces the suffering of mankind. If it provides the right amount of liquidity then you will not see any inflation or devaluation of the dollar from the Federal Reserve's action.

The real culprits in this are the groups lobbing for the reduction of regulations on loans and the merger between banking and stock market firms. By reducing the protective rules such as requiring ten percent or twenty percent down on a house, you do get more people into houses for a time. You also get higher prices, bigger profits, crazy interest only loans, and... larger amounts of risk. The people who look at the profit angle forget the risk aspect. The rules actually protect the big firms from losses when markets turn south, but are often portrayed as protecting the little guy. Funny how in their greed they forget that.

[The Central Scrutinizer]

The people who look at the profit angle forget the risk aspect.

They don't forget it, they ignore it.

[Gurdur]

I don’t see anyone talking about the scam artists that sold these loans to these homeowners and the huge BS used to sell them. How come no one is blaming or coming down on them?

Because that would interfere with
1) exclaiming just how smart one is and how dumb everyone else is
2) dumping on the Democrats.
_________

And that, if you will look through the course of the thread, is quite true.

[UserGoogol]

How thoughtful of the Fed. They're pledging to debase my hard-earned dollars with their fiat money created out of thin-air.

So? There are no free lunches in life. Even if you "earn" something, that does not give you some magical entitlement to be able to keep it. You want your money to remain at a steady value so that you can enjoy it, but other people want to increase the money supply (thus decreasing your money supply) so that loans can be somewhat propped up. If one (or, as in this case, many people) person wants one thing and another person (or large group of people) wants another thing, then a compromise must be made.

[The Atheist]

How thoughtful of the Fed. They're pledging to debase my hard-earned dollars with their fiat money created out of thin-air.


Given the tags for the thread, I wonder whether you have a different agenda to the one stated so far:

banking , damn lies , federal reserve , lies , money , new world order , nwo , scam

Damn lies, lies, and the NWO?

Just on the off chance that they're meant in a humorous way, I'll humour you for a moment.

Given that the amount of money tipped into the system is the largets since 9/11, yes, it's right to question the process, but the reasons for the glitch on the world markets are irrelevant. This is called realism - there is an issue of liquidity due to some poor business decisions. As a result the spillover has reached other markets. What does the Fed do?

Charged with managing the economy of the world's largest player, the Fed can either ignore its own charter and ignore the action, or it can act to ensure that the glitch doesn't become a major crash. What the Fed did was simply to take a responsible action, in terms of its normal activity.

Trust me, you'd be hurt a lot more by a sustained crash in the world's financial markets than you will be by the tiny inflationary pressure of a few billion extra greenbacks floating around.

If, on the other hand, the float was made at the behest of the NWO under its Jewish overlords, you can count me out.

[stilicho]

...the real culprits, the Federal Reserve....

....never-ending supply of funny money....

And it only takes one Federal Reserve to inflate the money supply and cause this mess.

Mess?

http://inflationdata.com/inflation/Inflation_Rate/Long_Term_Inflation.asp

That looks scary, right? A $600 car in 1914 would cost $13,000 now.

Unfortunately for the antideluvians such as yourself, your $13,000 now will buy you something much better than a solid black Model T Ford. Unless that's what you think everyone ought to be driving. And $600 or $6 billion wouldn't have bought you an internet connection in 1914. Try some Schumpeter some time.

You do know, too, that the Fed reduces the money supply to avoid the natural effects of inflation--right? How many bank panics do you think the Fed ought to allow annually to prove to you that a managed money supply is the best way to go? Three? Five? 108? Read more closely the real losses experienced by American citizens (most of them entirely uninvolved) in 1893 and 1907 and tell us all how you think that's a better way to go than a central bank.

[Rob Lister]

The real culprits in this are the groups lobbing for the reduction of regulations on loans....

me thinks you're blaming the wrong end of the ass.

[AlanGreenspan]

The day Tippit gets some formal education on the subject he will understand the difference between an unneeded expansion of the money supply and satisfying the demand for money. In the meanwhile he'll keep on preaching while ignoring the posts that correct his nonsense.

Let me guess Tippit you also believe almost every conspiracy theory out there?