Wall Street Woes
When our government prints money as fast as they are right now, there can only be one result- higher inflation. And with increassed inflation comes a higher price for gold! It’s a fact! Financial reformers have a chance to give stressed-out markets a desperately needed reality check. But I doubt they’ll do the right thing as they seldom have, especially in an election year.
This month’s near collapse of Bear Stearns (BSC, Fortune 500) has brought new urgency to the debate about how to shore up the financial sector. Fears that another firm will implode, and the observation that individuals have reaped millions of dollars in pursuit of policies that led their employers to the edge of the abyss, are fueling a drive to strengthen oversight of financial firms.
And we want to give the FED more authority? We want to put the Federal Reserve in charge of what? Since we put the Fed in charge of protecting the US$ (1913), it’s managed to lost 98% of it’s value. And we want them overseeing the protecvtion of other things?
No thanks!
Through the end of March, the Fed has provided $260 billion in short-term loans to commercial banks through the innovative auction process. It also has employed Depression-era provisions to provide money to investment banks. All the moves have been designed to cope with a serious financial crisis that has roiled U.S. and global markets and caused the near-collapse of Bear Stearns Cos., the nation’s fifth largest investment bank.
The Fed has been holding auctions every two seeks since December to provide short-term loans to commercial banks. It started with auctions of $20 billion, then pushed the level to $30 billion, and in early March raised the auction amount to $50 billion as the credit shortage grew more severe.
In announcing the move to $50 billion last month, the Fed said it would continue the auctions for at least the next six months, unless credit conditions show they are no longer needed. And by the time they figure that out we’ll be looking at an inflation rate in 2008 that’s more than double the 2007 figure.
And the home foreclosures continue!
The auctions are just one of a series of unorthodox steps the Fed has taken to battle the current crisis. The biggest of those moves was an announcement that it was allowing investment banks to borrow directly from the Fed. Previously, only commercial banks, which face tighter regulations, had that privilege.
The Fed also said it would make available $30 billion in financing to support the sale of troubled Bear Stearns to JP Morgan Chase & Co., hoping to prevent a bankruptcy that could have rocked Wall Street. But guess who can’t get a loan in America? Yep, you and me. Only the big boys get the help and the cream.
]
