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Fed Seriously Changes the Rules

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March 17, 2008 – Comments (6)

The fact that the fed has opened its discount window to non-banking institutions should have people out protesting in the streets.  This is serious. 

"Opening up lending to firms other than commercial banks represents a shift in the Fed's 94-year history. The so-called primary dealers include firms that are units of commercial banks and several that aren't, including Goldman Sachs Group Inc., Morgan Stanley and Merrill Lynch & Co. "

These are your tax dollars and this creates enormous new risks for the government.

6 Comments – Post Your Own

#1) On March 17, 2008 at 9:52 AM, dwot (51.50) wrote:

More from Naked Capitalism

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#2) On March 17, 2008 at 10:19 AM, dwot (51.50) wrote:

http://www.safehaven.com/article-9712.htm

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#3) On March 17, 2008 at 10:21 AM, dwot (51.50) wrote:

mandrake66, I wonder if people appreciate the risk the fed has just put on them...  If you are vested, this is helpful, if you aren't, and I tend to think more aren't, this is an enormous extra cost to absorb...

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#4) On March 17, 2008 at 10:49 AM, mandrake66 (93.81) wrote:

The Fed is trying to prevent liquidity crises from starting and spiraling out of control. Financial markets are considerably more complex than they were in 1929, the model to which the Fed's playbook was adapted, and react a lot faster. The Fed feels it is uncharted waters (it is), and Depression-scholar Bernanke is trying to update his playbook while it still might have an effect. People are only going to protest if he gets it wrong.

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#5) On March 17, 2008 at 11:28 AM, AnomaLee (28.52) wrote:

`That's got to tell you the economy is in a pretty precarious state.''

That says enough. This a problem that took the most part of this decade to develop, and we're trying to alleviate all these ills overnight. People can't stand the end of booms and go crazy when they lose their jobs or see their wealth (or perceived wealth) destroyed.

No surprise here. I figured this would happen. That's why I actually bought shares in UYG(UltraFinancial) last Monday because the FOMC has been prepared to do anything to bail out these institutions and then the next day we got a 400 point rally on the FOMC expansion. Usually, the market is higher within 45 days of actions & moves like that, so I'll test the water even if it's just money created by the printing press.

It's sad looking at how accelerated these actions have been for the past decade. The Federal Government has been significantly expanding its power and influence. And, the Federal Reserve has been expanding and adding more influence and control over the markets and balance sheet of our country,

 

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#6) On March 17, 2008 at 11:51 AM, dwot (51.50) wrote:

AnormaLee, I think this problem has been building since the early 80s when Greenidiot first launched a bubble.  It got crazy in the past decade, but it was a serious problem even a decade ago.  People have been living on credit they can't pay back and without the changes to credit the seriousness of the problem would have been apparent.

Here's another post to read http://finance.yahoo.com/tech-ticker/article/7166/Wall-Street-Reacts-to-Bear%2C-Fed-Shockers 

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