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Wednesday, November 26, 2008

Didn't Republicans used to bash Jimmy Carter for doing this?
Posted by Jill | 6:43 AM
Did you ever think you'd live to see the day when a Republican president's Treasury Secretary would, along with the Fed chairman, say baldly that they'd print as much money as necessary to deal with the banking crisis? But that's exactly the Bush Administration's plan in its waning days:
The Federal Reserve and the Treasury announced $800 billion in new lending programs on Tuesday, sending a message that they would print as much money as needed to revive the nation’s crippled banking system.

[snip]

In the last year, the government has assumed about $7.8 trillion in direct and indirect financial obligations. That is equal to about half the size of the nation’s entire economy and far eclipses the $700 billion that Congress authorized for the Treasury’s financial rescue plan.

Those obligations include about $1.4 trillion that has already been committed to loans, capital infusions to banks and the rescues of firms like Bear Stearns and the American International Group, the troubled insurance conglomerate. But they also include additional trillions in government guarantees on mortgages, bank deposits, commercial loans and money market funds.

The mortgage markets were electrified by the Fed’s announcement that it would swoop in and buy up to $600 billion in debt tied to mortgages guaranteed by Fannie Mae and Freddie Mac. Interest rates on 30-year fixed-rate mortgages fell almost a full percentage point, to 5.5 percent, from 6.3 percent.

But analysts said the program would do little to reduce the tidal wave of foreclosures. That is because most of the foreclosures are on subprime mortgages and other high-risk loans that were not bought or guaranteed by government-sponsored finance companies like Fannie Mae.

Stock investors reacted coolly to the announcements. The major stock indexes initially fell. The Standard & Poor’s 500-stock index later edged up, closing at 857.39, up 0.66 percent. The Nasdaq closed down 0.5 percent, at 1,464.73.

The long-term risks are enormous but difficult to estimate. They begin with the danger of a new surge of inflation, at least after the economy comes out of its current downturn. Beyond that, taxpayers will have to pick up the losses from loans that default or guarantees that have to be made good.


In other words, they're printing money to wallpaper the offices of Wall Street executives who will get their bonuses anyway, and then we're going to have to foot the bill for this.

I remember when we used to talk about revolution being the only way to change things, because we were dealing with Johnson and later Nixon refusing to get us out of Vietnam. God...how naive we were. We had no idea how bad it COULD get.
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2 Comments:
Blogger D. said...
Ooooh, let's reintroduce inflation! Because Germany in the '20s was fiscally cool! And we've totally forgotten the '70s, haven't we? And the '30s were just hundreds of years ago and nothing we learned then is applicable to today!

To misuse the line of the Flying Karamazov Brothers (Ho-o!): There's more to history than repetition. But not much.
11/26/08, 7:56 AM  
Anonymous Anonymous said...
I can't even count the ways to fail that this Administration has achieved! Yes, just print money....after all, this is the President who apparently thinks life is just a Monopoly game.
11/26/08, 10:45 AM  
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