Before the market starts going up.

This is insane but perhaps necessary measures. Better than the $700 B bailout plan which has done nothing to alleviate the severe crunch in credit markets.

The central bank is now officially the biggest commercial bank, which will likely take over everything from credit card debt to car loans. Crazy indeed.

So the same outfit that regulates interest rates and is supposed to act as an impartial regulator of this mammoth organism known as the American (and therefore international) market has stepped from behind the glass and forced itself into the room to begin actively to compete with the entities that still do this the free market way… At first blush, it sounds like a decent thing for the Fed to do, stepping in temporarily to do what no one else is willing to do with some level of expectation that they will eventually disentangle themselves and step back behind the glass when the situation is normalized — but the problem is this is the government we’re talking about, and this situation has fast become quite SNAFU.

Government involvement in anything is like mildew — once it’s in, you can’t get the stain out; and it will always stink.

The end of the free market indeed.

I looked for you all day yesterday but figured you were in the thick of it. You are really helping non-finance guys like me understand what’s going on. It really helps. Thanks so much.

Because to me, it sure looks like socialism.

n/p

Given the concerns about “credit tightening” that the “Bail out” was supposed to have addressed, wouldn’t this have been the preferred approach? Yes, interest rates will get skewed but doesn’t this directly address the problem?

Having a knowledge of how capital markets work, I understand (do not necessarily agree with) each move the Fed has made. However, I think a big question that many people are not talking about is *when *the Fed plans to cease these activities. I am not asking for a certain date, but I think they should set guidelines for the suspension of these activities based upon economic and financial indicators. Without these indicators one must assume that these government actions will become a permanent (like the vast majority of all government programs). If this is the reality, then we are very close to quasi-socialized markets. And that is scary.

In a earlier post I suggested what I termed a radical action, to guarantee the commericial credit market. http://www.redstate.com/diaries/blackhedd/2008/oct/02/a-note-about-libor/#c45403My Previous Post

But I have since spoken to a finance person in a large corporation who advised that most credit worthy corporations depend upon Lines of Credit for their financing needs.

Last night, I heard a report that companies are drawing on their lines of credit BEFORE they need them as a way to make sure they have the cash they need. The Fed stepping into the commercial credit market will help aleviate these draws and cause corporations to pull money from the commerical paper market instead. In other words, while the commericial paper market may only be $300 billion, the total capital that will be drawn from using them will likely be HUGE because companies will use them rather than lines of credit. This is not necessarily a bad thing but just to get an idea of how radical an approach this really is.

I thought the whole point all the Senators were saying was. I know every citizen who pays taxes and vores for me is telling me that I should not vote for this legislation, but i got calls from businesses that said, if I do not pass this bill, then they will have to shut the doors by friday. Car dealerships are unable to sell cars, suppliers cannot supply parts and resources, farmers cannot buy fertilizer and pest spray. Here we have a no legislation fed move that alleviates all of that.

Unless you are really adept at catching falling knives I would stay out of the fray.

The market actually started falling immediately after the Bernanke speech. LOL
How’s that for a vote of confidence?

Short selling ban set to expire Wed night.
If I were holding bank stocks I would be very nervous.

“Holding bank stocks”….

LOL….sometimes I crack myself up.