QUOTE
Credit Crunch vs. Central Banks - You Lose
by gjohnsit
Wed Dec 26, 2007 at 10:04:38 AM PST
Kos
"If I had to be bold I’d say we began a recession in December."
- Bill Gross, Pimco Funds founder
The credit crunch that started in August is threatening to bring the economies of the entire 1st world to a grinding halt.
To combat that the central banks of America and Europe are pumping cheap money into the markets at an unprecedented rate. These actions are not without consequences.
I find it astounding how half a Trillion dollars could get pushed out into the markets over just two weeks, and yet get almost unnoticed by the press.
What's more, this isn't the only cheap money injections that have been happening recently. The Federal Reserve has created an auction system (as opposed to the discount window) for banks to exchange bad loans for loans from the Federal Reserve. Thus by anonymous means, they are pumping $20 Billion of cash into the system every day, on a semi-permanent basis.
These are enormous numbers, but what do they mean? Isn't this what the central banks are supposed to do?
Complete Diary on Kos Link
by gjohnsit
Wed Dec 26, 2007 at 10:04:38 AM PST
Kos
"If I had to be bold I’d say we began a recession in December."
- Bill Gross, Pimco Funds founder
The credit crunch that started in August is threatening to bring the economies of the entire 1st world to a grinding halt.
To combat that the central banks of America and Europe are pumping cheap money into the markets at an unprecedented rate. These actions are not without consequences.
QUOTE
YESTERDAY WE LEARNED that the British government's guarantee to bail out Northern Rock's creditors is worth a staggering £100 billion. That's £5,000 [$10,000] per British household. This week the European Central Bank made $500 billion available through money market operations. And only last week $110bn of new money was created by central bank loans with artificially low rates and reduced-quality security. This is money creation on an epic scale.
I find it astounding how half a Trillion dollars could get pushed out into the markets over just two weeks, and yet get almost unnoticed by the press.
What's more, this isn't the only cheap money injections that have been happening recently. The Federal Reserve has created an auction system (as opposed to the discount window) for banks to exchange bad loans for loans from the Federal Reserve. Thus by anonymous means, they are pumping $20 Billion of cash into the system every day, on a semi-permanent basis.
These are enormous numbers, but what do they mean? Isn't this what the central banks are supposed to do?
Complete Diary on Kos Link
Emphasis added. A most intelligent post here. Complete with graphs and easy to understand. This IS the reason for no media coverage. I've read about this for a long time...but gjohnsit frames this problem well.
Maybe part of my anger comes from growing up when everything DID WORK. Life was simple and complicated, but this point in time is a complete disaster. HOPE, we need HOPE...and WE NEED it NOW!
