Fed Pledges $7.4 Trillion For Credit Crunch
By Justin Gardner | Related entries in Business, Economy, Media, Money, VideoWell, this certainly wasn’t expected, but what I’ve been hearing from most economists lately is that what the markets need right is reassurance that things won’t spiral out of control…and the only thing to do that is a big pot of money.
Nov. 24 (Bloomberg) — The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago.The unprecedented pledge of funds includes $2.8 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the only plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.
Biggest reason why?
The worst financial crisis in two generations has erased $23 trillion, or 38 percent, of the value of the world’s companies and brought down three of the biggest Wall Street firms.
Unfortuantely, there is such a thing as “too big to fail” and even Ben Stein gets that…
In fact, many economists want Obama to be even bolder with his economic plans and push for $1 trillion or more in new spending.
More as it develops…
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November 24th, 2008 at 10:58 am
It’s hard to take Ben Stein seriously.
Everytime he talks all I hear is “Bueller, Bueller……..”
November 24th, 2008 at 12:47 pm
First off, not every talking-plastic-head that use to be loan officer at their community bank should really be deemed an “economist” — even if these moronic bobble-head charlatans support your position.
More importantly though, this is going to be easy with nothing but economic benefits for my children right Justin?? I mean, we’ll just print more money or borrow more money…not a problem.
If Obama was a legitimate leader, he’d tell the truth to the American people: There is no easy way out of this, it is going to hurt, but we must sacrafice so that our children are not stuck with the bill.
Some people REALLY do not get it and Justin…you seem to be one of them, unfortunately.
November 24th, 2008 at 12:55 pm
My prediction is that the ultimate end of this financial crisis is going to be the default of US government debt. There simply is no stomach in Washington to let the market correct itself– the government is going to spend even more money it doesn’t have in order to cushion the impact of the crisis from everyone and everything. This will continue as long as the US government can write blank checks. This will continue until the US government approaches default on its debt, and after that, it’s hyperinflation as the US govt prints money to prevent the default.
Unfortunately, periodic panics are a feature of capitalism and attempts to erase their effects will, ultimately, just shift the problem elsewhere.
I am overall pleased with the election of Obama (I did vote for him) but I believe he and his democratic colleagues will prolong, not hasten this crisis by failing to allow the markets to correct themselves.
November 24th, 2008 at 1:02 pm
J. Harden,
Obama’s said that.
Really.
On multiple occasions.
Using almost those same exact words.
There is nobody that views this as going to be easy now or later. Everyone’s in agreement on the goals and even mostly on what we’re willing to sacrifice. The argument is about best tactics.
November 24th, 2008 at 4:43 pm
Oh look at that, that is actually exactly what he said at today’s announcement of his economic team. Sir, I demand you change all of your opinions immediately.
November 25th, 2008 at 4:16 am
This has nothing to do with Obama. He just came in, how do you expect him to repair economic damage 8 years old?
November 29th, 2008 at 3:04 am
….Projections and predictions conjured by those who took the shotgun seat in the vehicle which drove us to the precipice.
We have created monsters in the form of omnipotent economists. They are not what they seem. On the other hand, perhaps we should reassure them.
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http://pacificgatepost.blogspot.com/2008/11/economists-our-new-philosopher-kings.html
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Perhaps society has simply overplayed them. It would be much more productive to listen to entrepreneurs.