Federal funds rate jumps to 7 %

[gnome]

We may indeed NEED $700B from taxpayers.

But it should go for FRESH CAPITALIZATION, not "bailout of bets gone bad".

If I could choose, I'd have them take more time to be sure (1) we got the "best bang for the buck" and (2) the guilty suffered the most and are NOT bailed out from reckless and greedy bets made.

Paulson tried to RUSH this legislation through with the provision that "he be in control.. with no review nor possible overturn of his decisions by either Congress nor a court of law"....

That smacks of the same old "Power and Money Grab" to me...


I DO NOT TRUST PAULSON!!

 

[GTS]

I've always been a big believer in the "Nuke 'em all and let god sort it out" philosophy.

 

[kashirin]

I would be much easier to trust if new people
not Bernanke or Paulson - who directly created this problem - were in charge

Nobody trusts Bernanke and Paulson.

 

[Bigpipn]

Quote from GTS:

I've always been a big believer in the "Nuke 'em all and let god sort it out" philosophy.

A nice twist from "The Program."

 

[eagle]

They didn't create this problem since it wouldn't happened overnight, they're just unable to effectively solve this inherited financial problems.

Quote from kashirin:

I would be much easier to trust if new people
not Bernanke or Paulson - who directly created this problem - were in charge

Nobody trusts Bernanke and Paulson.

 

[gnome]

Quote from eagle:

They didn't create this problem since it wouldn't happened overnight, they're just unable to effectively solve this inherited financial problems.

Yes, but they COULD propose a plan which smacks of honesty and efficiency rather than PAYOLA..

 

[CoolTrader]

Can fed give that $700b as loan to those troubled banks with illiquid assets as collateral, instead of buying those assets?

 

[Landis82]

Quote from Neodude:

This isn't manipulation, it is financial panic at the banks. The reason Fed Funds and Libor spiked is because banks are afraid to lend to each other, each one fearing the other will be the next one to go under.

Its unbelievable how ignorant "main street" people are. They rather shoot themselves in the foot in the hopes of punishing bankers without understanding how they will be effected by their actions.

-Neo

Thank You.
Excellent point.
But as usual, it's lost on the highly naive economic base of most on ET.

 

[IanMacQuaide]

Speaking of the so called Credit Crunch,
I was at a real estate closing yesterday and spoke with a Mtg. Broker. The lady said she hadn't seen any problems getting a loan, and was writing 97% LTV's all day long. With good credit and proof of income, you can buy a house! Amazing huh?

 

[cokezero]

Quote from Neodude:

I assure you it is not overstated. The impact of what is happening amongst major banks is not hitting main street yet because some companies have locked financing with their banks for a certain period of time, but when those locks expire those banks will be forced to reduce that credit because of their own borrowing constraints or to raise rates to the going rates on wall street.

Unfortunately many companies rely on bank credit to do things like pay salaries before products are sold; exporters and importers rely on banks to finance payments before deliveries... I could go on and on.

The point Im trying to make is that if you don't have a functioning interbank credit market NOW you might not have one two months from now for the rest of us. Without credit provided by banks most major US companies can't function, if they can't function then "main street" people who are innocent and didnt borrow over their heads will lose their jobs.

I ask you this, what is the worse solution, punish the guilty along with the innocent or let the guilty free?

-Neo

-Neo

Please educate me and totally I'm not familiar with how this works. If banks are afraid to lend to each other because they don't know what the other banks have on their books it means the money is out there right? They just don't want to lend it to other *banks* because they don't trust each other right? How would it affect the small businesses from borrowing?

If small business A deals with Bank A (with no money) and Bank A couldn't get the money from Bank B (with the money) because Bank B wouldn't trust any banks why can't the small business go directly to Bank B? It is Bank A that Bank B don't trust not the small business isn't it? If the small business is thriving and its book strong why can't it just go to Bank B who has the money and skip the failing Bank A all together? It sounds like a good market cleansing process to me (letting the risky Bank A fail and letting the prudent Bank B get a bigger market share)???

How would Bank A be able to freeze up the lending and why do we need to bail out Bank A to "unclog" anything? It's not like Bank A is the only bank in the world that the small business can work with???