-the bailout of the Bear Stearns creditors;
-the bailout of Fannie and Freddie;
-the use of the Fed balance sheet (hundreds of billions of safe US Treasuries swapped for junk toxic illiquid private securities);
-the use of the other GSEs (the Federal Home Loan Bank system) to provide hundreds of billions of dollars of “liquidity” to distressed, illiquid and insolvent mortgage lenders;
-the use of the SEC to manipulate the stock market (restrictions on short sales);
-the use of the US Treasury to manipulate the mortgage market (Treasury will now for the first time outright buy agency MBS to manipulate and prop up this market);
-the creation of a whole host of new bailout facilities (TAF, TSLF, PDCF) to prop and rescue banks and,
-for the first time since the Great Depression, to bail out non-bank financial institutions;
-the recent extension of the collateral available for the TSLF and PDCF facilities to a much wider range of toxic securities including equities and thus allowing the Fed to effectively manipulate even the stock market;
-and a whole range of other executive and legislative actions (including the recent bill to provide a public guarantee to mortgages for banks willing to reduce their face value).
21.9.08
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