Friday, Sep 19, 2008
Paulson and Bernanke presented a "chilling" picture of the state of the financial system
washington post: Citing Grave Financial Threats, Officials Ready Massive Rescue
The Bush administration is urgently preparing a massive intervention to revive the U.S. financial system, including a plan to sweep away the unpaid loans that are choking banks and blocking the flow of money to borrowers.
The plan involves using hundreds of billions of dollars in government funding to buy bad loans, leaving banks with more money and fewer problems, according to two sources familiar with what was said at the meeting.
Posted by malct @ 01:30 PM (910 views) Add Comment
19 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. renting2 said...
This will turn out to be the most stupendously expensive roll of wallpaper and pot of wallpaper paste.
2. Planning4acrash said...
Welcome to the United Socialist States of America (USSA)
3. planning4acrash said...
Welcome to the United Socialist States of America (USSA)
4. alan said...
FTSE 100 up 425 points at 1.50pm - that's about 8.75% on the day.
If the US are spending all that cash, I'll join them in spending my pounds, but I'll buy more gold.
5. i-cld-murder-a-blt said...
I have some monopoly money if they want that too.
6. mrmickey said...
Bail out works hyperinflation, bail out fails massive deflation, I think that about covers it.
7. jack c said...
6. mrmickey said...Bail out works hyperinflation, bail out fails massive deflation, I think that about covers it.
If it half works you get Stagflation
8. mrmickey said...
Jack c I think we've already got that, their obviously trying to go for the hat trick.
9. beartil2010 said...
It's like the old quote 'your statistics tell me that with my left foot encased in ice and my right foot on fire I should be comfortable' or whatever. All the different financial nightmares at once, and with the Fed and Gordon Brown at the bow of the ship, who knows where we're going to go?
No one can predict anything - while I'm mixing my metaphors
10. plato said...
Question from ordinary mankind:
This is all very strange! Are they trying to save the Economy or the Banks? Or are they one and the same thing?...... I'm confused.....Will this save the Economy?
11. beartil2010 said...
No, it will not save the economy. If it 'saves' any banks, it only saves them from going bust, allowing them to run on as they are now, insolvent with a load of depreciating assets but able to hide it. It also creates even more moral hazard by allowing the banks to continue to run whilst creating this environment in the first place.
What it does do is move more of the total share of money into the hands of banks and rich people over the poor. It also creates an extra tax burden on the man in the street; and on top of that, if we manage to avoid deflation, it will create massive inflation with the volume of money being increased hugely.
It's either a plan for idiots by idiots, or a plan by scum to save their scum mates, depending on how you look at it.
12. amjidk said...
i wander how this will affect the fall in house prices??
13. beartil2010 said...
Not much. There isn't enough money in the world to cancel out the depreciation of the assets.
The American banks were still happy to lend to people - it's the people that have stopped paying and started defaulting. They are still defaulting on the loans, and the employment picture is not getting better, but worse.
Even if banks start to be able to lend a bit more, it might just slow things down, but it won't stop a crash. I can't picture loads of people running out to buy houses right now.
Besides, the Congress has said they won't do anything this legislative session - ie. for the next few months - although who knows they might change their mind!
14. letthemfall said...
What is the implication of the US govt buying all this bad debt? Where is the money coming from? Fed funds? - a collapse in govt spending elsewhere? Or is it "new" money? What will this do to inflation? Or is there a magic box full of cash somewhere? I must admit, I don't understand this.
15. plato said...
11. beartil2010
Thankyou for your clear and well defined answers. This is what the man in the street needs. It's all very well for the more technically minded of us to talk shop, but I am sure many viewers of this sight are often lost and just sigh! Unable to blog and somewhat confused.
I'm sure in general(in the world of economics) this will go a long way to curing the ignorance we speak of regarding the general public, who I am sure are beginning to want to understand.
Once again : Thankyou for taking the trouble to explain.
16. plato said...
letthemfall
I'm certain they are printing it. However it is future debt and a devaluation of all our money. It will have to be earned. This is either an as yet undiscovered panacea or a formula for disaster.
17. Pundit said...
@10. plato
They are trying to save their own skins – with the imminent US election; the last thing the Bush administration can afford is a Democrat victory. If the Democrats win and open the ‘books’ post election, the whole world will know the true level of mismanagement and corruption that has occurred in the past 10 years.
18. letthemfall said...
plato
There is an article in the FT about this which I read after my last post. Apparently the debt that needs to be covered amounts to about 10% of the Fed's resources; the cost will be met by taxpayers in future years; ie hard times ahead. And what goes for the US will presumable go for us too. One would like to think that the many guilty parties for this state of affairs would be brought to book. Some hope.
19. plato said...
Thanks everyone. Good to see reasons from knowledgeable bloggers to help the man in the street judge the situation.
Just to add :
This last couple of weeks has resulted in a substantial loss for many pension schemes. Most people don't know how to manage their schemes and rely on fund managers. Simple switching can avoid major losses.
Is anyone keeping an eye on this?
These people are helpless and probably don't have any idea what is happening and they are in Company schemes. Their future wealth is being eroded. There are doubtless Millions in this position.