LIQUIDITY EVERYWHERE BUT MAIN STREET

[WhiskeyGirl]

LIQUIDITY EVERYWHERE BUT MAIN STREET

The Fed has grown its balance sheet from $884 billion to $2.055 trillion in the space of two months and extended almost $1 trillion in additional support to the banking system through the various emergency lending programs enacted or expanded over the last year.

But precious little of this additional liquidity is finding its way through to households and corporate borrowers. In fact, most of it is now sloshing around the banking system like so much excess ballast.

(sounds like the trickle down theory isn't working)

SURPLUS MONEY, NOT ENOUGH CREDIT

Policymakers have ignored the distinction between money and credit (or to use monetarist terminology between narrow money and broad money). The Fed can create unlimited (narrow) money by adding reserves to the banking system. But it cannot create credit (broad money, or lending from the banking system and other financial institutions to one another and to end customers).

THE $700 BILLION TARP SLUSH FUND

TARP is beset by even bigger problems. Recall the $700 billion fund was originally created to provide a buyer of last resort for mortgage-backed securities and other assets that had become illiquid and were allegedly trading only at firesale values...

...The fund has quickly mutated. The Treasury used $125 billion for capital injections into nine large national banks, some of whom claimed they did not want or need it. Another $125 billion is being made available for capital injections smaller regional and community banks. Some $40 billion is now being used to support AIG.

(AIG?  I'll be happy to have maybe like 1/4 billion forced on me...and I won't come back later and ask for more.  )

read the rest here.
http://blogs.reuters.com/great-debate/2008/11/13/tarp-and-fed-facilities-unravel/

[WhiskeyGirl]

My dog needs a bailout too.  He's looking at one quality pig ear a day ($1 / day) for the next 1,000,000 days, he'll make the money stretch, he will invest wisely, and he will not ask again. 

My beloved cat is beyond his mousing days.  He is happy to sleep on a chair by the window.  He has graciously volunteered to manage the dog beast's money.