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Tuesday, March 11, 2008

But Will This Really Fix the Problem?

From the Bloomberg wire ...

March 11 (Bloomberg) -- The Federal Reserve will hold auctions to lend as much as $200 billion in Treasury securities and increase swap lines with two foreign central banks to try to ease renewed turmoil in credit markets.
The Fed said in a statement it is establishing a new Term Securities Lending Facility to, through weekly auctions, lend as much as $200 billion of Treasuries to primary dealers for 28
days, instead of overnight as it currently does. The loans may be secured by collateral including agency and private mortgage-backed securities, the Fed said.
The Federal Open Market Committee also authorized increasing currency swap lines with the European Central Bank and Swiss National Bank to $30 billion and $6 billion, respectively, increasing the ECB's line by $10 billion and the Swiss line by $2 billion.

XX My take -- but will this really fix the problem? In a word, "no." I think it just puts the US taxpayer on more of the hook as we monetize more mortgages and bail out Ben Bernanke's banker friends.

Indeed, this only makes me more certain that there are more shoes (bad news in the global financial sector) to drop!
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