Fed takes second action to add liquidity into banking system (updated)

[Zenlitened]

Source: Marketwatch.com

Fed injects $16 bln in liquidity in Friday's second action
By Greg Robb
Last Update: 11:17 AM ET Aug 10, 2007

WASHINGTON (MarketWatch) -- The New York Federal Reserve said Friday the Fed bought $16 billion in three-day repurchase agreements in mortgage-backed securities. This is the second action by the U.S. central bank Friday to provide liquidity "to facilitate the orderly functioning of financial markets." Earlier Friday, the Fed bought $19 billion in three-day repurchase agreements in mortgage backed securities. Central banks in Europe and Asia are also injected billions of dollars into banking systems, moving to further boost liquidity in markets suffering the ripple effect of the subprime-credit crisis. End of Story

Read more: http://www.marketwatch.com/news/story/fed-injects-16-bln-liquidity/story.aspx?guid=%7BFE2C8BED%2D051B%2D41E2%2DB088%2DA4FC095F35D6%7D&dist=hplatest

---

Also:

Federal Reserve Statement
August 10, 2007 9:31 a.m.

The Federal Reserve is providing liquidity to facilitate the orderly functioning of financial markets.

The Federal Reserve will provide reserves as necessary through open market operations to promote trading in the federal funds market at rates close to the Federal Open Market Committee's target rate of 5-1/4 percent. In current circumstances, depository institutions may experience unusual funding needs because of dislocations in money and credit markets. As always, the discount window is available as a source of funding.

Source: The Federal Reserve

Link:
http://online.wsj.com/article/SB118675254324894252.html?mod=Economy

[shraby]

1. They're discussing it now on the t.v.

[gratuitous]

2. Plenty of dough for overrich bond traders

But it's waste, waste! to spend an extra $35 a month on a single mother with two kids so she can buy groceries or see a doctor.

[ThomCat]

15. You nailed it.

There's always enough extra money to prevent the rich from becoming less rich. There's never any money to help the poor.
x(

[screembloodymurder]

3. And rates haven't moved. Fed can't hit their target rate.

The lenders don't want to buy more worthless crap. They have enough already.

[beberocks]

4. Just crank up that ol' printing press!

Which will result in more inflation. The only good thing to come out of this might be that the brain-dead GOP will finally realize we can't afford the Iraq war. I think many of them signed onto the Iraq war thinking that it would help the U.S. economy, and now have to face a crumbling U.S. economy collapsing under a mountain of debt.

[PassingFair]

6. That will NEVER happen. They are NEVER wrong!

It was the NEGATIVITY of the LIBERALS that caused
the downfall!

Everyone knows that.

The Emperor's Clothes were BEAUTIFUL and AWE INSPIRING!

[formercia]

13. The Iraq War has been the only thing holding up the economy

Massive trickle-down using a credit card with infinite limit and no monthly payments.

I wonder if Junior gets air miles with every Billion thrown down the rat hole.

[defendandprotect]

14. The Fed charges interest on anything it prints --

JFK reversed this for a short time having the Treasury print our money.

[ringtailtooter]

26. And that's the way the U.S. financial system was originally set up. But now

The Federal Reserve Bank is actually owned by 12 large banking families in America and Europe, not by us or our government.

One of the not-so-well-known conspiracy theories about JFK is that those very rich and powerful families had him knocked off for doing that. One of the very first things Johnson did upon taking office was returning it back to the Federal Reserve Bank.

[HowHasItComeToThis]

30. WHO OWNS THE WORLD

THE BANKERS

[hack89]

43. Can you name the 12 families? nt

[mountainvue]

67. The Rothschilds are one. n/t

[NotGivingUp]

62. That was my first thought when I read it. Sounds probable to me. n/t

[Ikonoklast]

28. And was killed for it n/t.

[LaPera]

36. And look what happen to JFK....perhaps we've been all looking in the wrong place....

[Yavapai]

40. My current investment stratagy.

Remembering the inflation that came after the Vietnam War, it was my thought that there would probably be another round of inflation in our future. My strategy now is to invest in solar and other energy projects at my residence that should reduce our home expenses. As the cost of energy is bound to increase in the future, this seems to me to be the best possible investment that I (an investor of very modest means) could make. At least it seems better than the money sitting in a bank account that pays so little interest that it can’t keep up with inflation. This is also helpful to reduce our carbon footprint.

Just a thought

[Viva_La_Revolution]

59. good plan!

Welcome to DU!

(love your screen name.) :hi:

[NotGivingUp]

63. Sounds like an excellent strategy to me. n/t

[onewholaughsatfools]

5. this is the reason

this is reason I chose this screen name for times like this........blessings

[redqueen]

9. Hi onewholaughsatfools...

welcome to DU!

:hi:

[TechBear_Seattle]

7. This is NOT good

An action like this means the markets are in a very bad way. Maybe, this time, the sky really is falling. :yoiks:

[Newsjock]

8. $89 billion so far this week ...

... or roughly $300 for every man, woman, and child in this country. How does it feel to have another $300 of your money handed over to the Wall Street fat cats? You weren't using it anyway.

[dipsydoodle]

10. The meek shall inherit the earth.

I'm meek : can I have summadat $89 billion - please. A few Baby Ruth bars would be good to be going on with :rofl:

[rodeodance]

23. whow. just whow@

[lyonn]

46. Just f 'en great, they rive up the printing press and print more money

All those that will lose their home are just "dummies" to use bush's backward BS he spouted yesterday about the bad loans on homes. Each time I think things can't get worse, or, that won't happen because we have safeguards, yeah, right. I have a few sheckles in the bank, FDIC insured. Insure? You gotta wonder. This New Govt. of ours giveth and taketh away. they make the rules.

Reagans "bountiful years" will be nothing compare to this gawd awful mess. War, no money to pay for it, China, etc., have invested in us and can demand we pay up. Does this mean we have mortgaged America and lost it through bkcy?

[Julius Civitatus]

11. The market has been overinflated on hype for years...

This was bound to happen. What surprises me is that it didn't happen earlier. There's been plenty of indicators screaming out loud about the financial and housing markets being unrealistic, unrealistically inflated, and working on hype alone for many years.

I'll put some cash under the mattress now, just in case.
:(

[lyonn]

48. Under the mattess is probably safer than FDIC insurance

on the money. I even had my husband, mr. conservative when it comes to money only, mentioned it might be a good idea to draw some out (for safe keeping, ha). What if millions do that? Then all hell could break loose. Can we impeach now? Naw, we are investigating and when and if we get some "real" evidence we will go from there....

[whistle]

12. That's $40 billion so far contradicting their own "do-nothing" policies announced

...by the Fed as recently as this past Tuesday, August 7, 2007. Over the entire world Central Banks have infused over $133.0 billion in a one day bailout, but not to help the general public. These monies are mainly to help other banks from going under. It is like credit welfare for the very rich and powerful!

Together with prior financial facilities available in the European Union before this past Tuesday, there are now an estimated 440 billion euros in ECB injection money pumped into that banking system. Yet none of these funds are available for lending out only to save the asses of those who need it least.

[ThomCat]

17. Is there any doubt that protecting the rich is their primary goal?

Economic concern only addresses the top stratas. The rest of us are background noise.
x(

[whistle]

19. Not at all, never has been any doubt about that, just now it is becoming

....obvious to those who have been asleep or doped out on Republican/neocon koolaid.

[defendandprotect]

16. Takes your mind off Cheney's new threats to bomb Iran -- ????

[EnricoFermi]

42. never

It certainly increases the likelihood, doesn't it?

[lyonn]

51. Ya gotta wonder..... would Americans understand

what this admin. is really all about? Even if doofus and co. attack another coutry.... Would They Get It Then???

george's speech yesterday was so insulting. Our media continues talking about the Mine and Bridge?? Jon Stewart and Colbert are the only ones in the media(?) telling it like it really is. The clips those shows are putting together where george has been "literally" saying the same BS over and over is awsome. Now, CNN and MSNBC could "try".... never mind... they have their investments in other places, and it's not the media they have invested in that matters.

[wordpix]

18. "the discount window is available as a source of funding"---now, where would I find that discount

window? Not at my bank. I guess you have to be a Wall St. insider or banker to get to that window. :eyes:

[Squatch]

20. Any broker can help you buy discounted bonds

Prices and rates move in opposite directions.

Just a cursory search of bonds currently for sale on Scottrade reveals numerous AAA-rated bonds at DEEEEP discounts.

[Tempest]

21. Think inflation is bad now?

Pumping money into the system is only going to increase inflationary pressures.

The Fed is playing for the short-term and without regard to what the repercussions will be for the future.

[Lasher]

32. This is how they steal the life savings from what's left of the middle class.

Did you take a lump sum on your pension instead of an annuity? Have you put what you could every month into an IRA and/or a 401(k), thinking they can't take that from you? Well you were wrong.

Just print extra money and hand it to the wealthy elite. That way your savings will have less and less value and of course the rich people get free money. Your money. It's going on right now. But you can stay ahead of inflation by investing wisely, right? Did you happen to notice that the stock market is taking a huge dump right now? Have you ever bothered to check out how the market has really been performing since January 2001?

If you've got a wheelbarrow of Deutschmarks I might be persuaded to part with this loaf of bread. Maybe not.

[Tempest]

33. I predicted this back in 2001

I dumped my stock, pulled out of my 401 plans and put most everything into the precious metals market.

The market hasn't budged since 2001 after accounting for inflation. Gold, however, has seen some impressive gains.

[Lasher]

50. Good for you, Tempest

I wish I would have been as savvy. I lost my shirt on the stock market during the Bush crash but since 2003 I have had half my nest egg in a money market fund (cash). The rest is in stocks, mostly in foreign equities, which have done well. My thinking in that respect was to avoid US dollar-based stocks and the strategy has paid off. But I've been getting my ass kicked during the last 2 weeks, that's for sure.

Maybe I'll follow your model and throw something at precious metals. But if I may be so bold, it might be a good idea for you to diversify just a tad.

[Tempest]

53. I'm safe as long as the worldwide turmoil continues

Thanks to Bush and the saber rattling towards Iran, I'll continue to be safe for a while to come.


Gold futures rallied Friday, as traders recognized the metal's allure as a safe haven amid worsening credit market troubles that prompted a fresh injection of cash by several central banks.

[RainDog]

39. but also ppl who took out loans when they shouldn't have

this injection keeps the greedy financiers of these subprime mortgages from going bankrupt, which in turn would cause these mortaged middle class to be unable to meet payments...they would/could likely be adjusted up.

the subprime bankers have already been raising payments on people who took out these loans by more than 10% recently to try to save their own asses. this has created a situation in which many in the middle class face either walking away from their homes or selling in desperate situations...and probably bankruptcy.

good thing bushie passed those tough bankruptcy laws to avoid any responsibility on the part of the companies who give loans that such bad risks. no real risk for them, it seems. of course, if enough people go bankrupt, I guess those "detention" centers could be used as debtors prisons and slave labor could come back into style. /snark.

[Lasher]

47. All according to plan.

Bankruptcy legislation and all.

Subprime loans should never have been allowed but many people who got them are victims of their own greed. Just had to have that brand spanking new mansion they could never actually afford.

[Johnny Noshoes]

49. I have never thought ...

that the money in my 401k was "real" until I have it in my hands and even then you're right it probably won't be worth much at all :-(

[antigop]

58. It's also why they want to get rid of defined benefit pensions and Social Security

It you are "entitled" to a monthly pension benefit and Social Security payment, then that's money that they can't get out of you.

See? Switch from a defined benefit plan to a cash balance -- give the employee a lump sum. Employee puts said lump sum in the market only to see it go away.

Yes, I definitely think this is all planned to rape the middle class.

[LaPera]

37. Keeping Bush's 'economy" looking good, so to continue his war for corporate profits....Let the

next prez deal with it...by then, all our civil rights will be gone anyway and we won't be able to say or do shit.... but must work as underpaid, no benefit workers, in-debt, paying outrageous prices for even the most basic of necessities, living in our deprecated homes, while paying off the corporations, the rich and the militarys debts!

[taught_me_patience]

22. I thought Hanky Paulson

said that subprime was "contained". The administration wouldn't be lying to us again would they?

[louis-t]

24. Am I wrong, or did Reagan do the same thing?

Isn't this why we had double digit interest rates in the 80's? You mean, it wasn't because the economy was so wonderful? You say it was because tax cutting Repugs were printing money as fast as they could spend it (on nuclear weapons and phony star wars programs)???? The dickens, you say!

edit: I mean, spending money as fast as they could print it. Yeeesh!

[Yavin4]

25. What Happened To "Free" Markets?

What's with this government intervention? What happened to "let the marketplace decide"?

Socialize the costs...Privitize the profits! What a system?

[lyonn]

54. Oh that was sooo good, You nailed it! nt

[daninthemoon]

27. No, no, just yesterday the pres said the economy is great.

Best ever. Couldn't be better. Now, I'm outta here. Gotta go on vacation at my royal family's real digs in Maine. Might swing by Texas for a quick chainsaw pull, too.

[HowHasItComeToThis]

29. "to facilitate the ODOROUS functioning of financial markets."

BANKERS SAVE THE BANKERS.

LEACHES OF SOCIETY.

GOTTA PROTECT THE STOCK MARKETS MAKE BELIEVE PROFITS.

[clayton72]

52. Not as bad as it might appear

The economy has been running hot for a little while, but this isn't the irrational exuberance of the 90's. We are starting to see a correction, but it's probably not going to lead to a fullblown recession. Those who have been responsible with their money, and credit, have nothing to fear so long as their employment sector is stable.
If you do find yourself in a bad financial position (ie. multiple credit cards maxed out, upside down on an auto loan, upside down on a home loan due to previous debt consolidation on a varible market with a sharply rising interest rate, etc) this would be a damn good time to get some financial counciling. Help is available. You may wind up having to sell your house, car, etc and settling your debts, but that's ok. You may have some tough choices to make, but you're far better making those choices yourself early rather than waiting until it's forced on you. If you're living beyond your means it's definately time to stop.
Unfortunately this is the trap many find themselves in. Credit has been a little too easy and it's let a lot of folks make some poor financial choices, lenders and borrowers alike. Lenders are being remarkably forgiving right now to avoid forclosure and default on loans. The key is to work with your lender. Communicate with them regularly. You're going to have to pay them back, but if you get the right help and negotiate with your lenders you can get more time and maybe negotiate a rate reduction.

The value of the dollar is another mater all together. But it's devaluation isn't necessarily a bad thing. I'm not going to pollute the thread by going into all that; little private credit in the US is held by foreign institutions.

Bottom line: Stop spending money you don't have and come up with a plan to get out of debt ASAP.

[tom_paine]

70. I call bullshit. Malodorous bullshit.

Are you selling credit counseling?

Your entire post is not only a non sequitur, equating personal financial issues (yes, getting out of debt is always a good idea) with the more global issues being discussed in this thread.

And, way to hit the Loyal Bushie Comrade Talking Points:

The economy has been running hot for a little while

the irrational exuberance of the 90's

But it's devaluation isn't necessarily a bad thing.

Yeah, belief in Loyal Bushie Government Propaganda (unemployment at all time low!) is touching, if not naive. If you were alive in the 70s, would you have believed the Soviet Agricukture Production Reports, as well, for our Bushies and their Commies are cut from the same cloth of deceiver.

That irrational exuberance of the 90s was the fact that all boats were rising for a change, not just the top 20% and hyper-rising for the top 1% and rocketing up for the top 0.1%.

And of course, weak dollar policy has many benefits for many people...just nobody making less than $1,000,000/year.

:puke:

[Zenlitened]

31. Make that three on the day: Fed pours another $3 billion into the pool.

Total for the day: $38 billion. Largest injection since 9/11, per CNBC.

[rodeodance]

34. Stocks fall as Fed adds more liquidity (3rd Fed dump)

Stocks fall as Fed adds more liquidity

By TIM PARADIS, AP Business Writer 15 minutes ago

NEW YORK - Wall Street began to further its losses again Friday after the Federal Reserve said it would for the third time inject liquidity into the banking system. The afternoon move perhaps raised the notion that troubles in the credit market are worse than perceived.


The stock market, which has been gyrating for weeks over fears that credit is drying up, had pared its losses after the Fed's second injection of cash and following morning comments from the central bank that it would do all it can to "facilitate the orderly functioning of financial markets." The day's declines and continued volatility, however, showed the depths of fear that have investors yanking money out of stocks.

The Fed added $19 billion in liquidity to the market Friday morning, then another $16 billion and, in mid-afternoon, $3 billion.

http://news.yahoo.com/s/ap/20070810/ap_on_bi_st_ma_re/wall_street;_ylt=Ao3Dyw7KUpHO3y3xTae84uWs0NUE

[rodeodance]

35. "aised the notion that troubles in the credit market are worse than perceived."

[Hestia]

38. Okay, now that we know what is really going on

what can we do to weather out this financial debacle and not starve in the meantime? My personal thought is, why in the heck am I paying MY mortgage and MY credit card statements, when it appears that a lot of others aren't. Look who I probably owe anyway - republicons, who have raped, pillaged, and plundered enough already and are now getting further cash infusions for an evidently job well done.

How does one ride out this financial mess? What are ya'll (economist type peoples) seeing for the everyday joe and jane's future? Soup lines? Civil war?

I can't figure it out (like most people) because I know the financial game has been kept in the dark from people like me actually figuring out what in the hell is going on.

Am I making any sense?

[FreeStateDemocrat]

41. Pardon my ignorance but is this 39 billion added to our national debt?

Also, if the government had 39 billion available why hasn't the New Orleans' levees been made cat. 5 safe and the city's health services fully restored? My guess is the money is only for the "haves" and "have more's" that the idiot and the puke party look out for.

Edit: sp

[skids]

57. The "Fed" is not the government...

...it's a private bank. Which can print money. Which they just essentially did. They made paper that is just as good as your paper, and gave it away. Why do you think they call him "Helicopter Ben"?

Assuming you have paper, you just got shafted, because what should have happened (eventually) is you should have found yourself in the position where you could have gotten a really great rate on a CD. Maybe even one that kept up with inflation (I know, fantasy land, right?) But they didn't want that to happen, so instead, they turned around and gave all the people that know how to work the system a great rate on a loan, and even it appears allowed them to offer up those junk mortgage backed securities as their collateral.

But most people don't have any paper to speak of, so they won't complain. I mean, they don't complain about their savings accounts losing value every year, because they don't really carry a balance.

Being as I have paper, and I'm one of the ones getting shafted in this whole thing, I don't feel too sorry for the guy on main street losing his house. While I was eating Ramen noodles and playing five year old video games to save money for a rainy day, he was taking his brood out to disneyland on a home equity loan. Hangover time. Sure, he's a victim in all this, but at least he had his party while he lasted. Us frugal oddballs just get to watch our money devalue.

The only people I feel sorry for are those who've been living in poverty through this whole thing.

[FreeStateDemocrat]

65. Thanks for the info, it seems this would devalue the US dollar and create

inflationary pressure with a resulting eventual increase in interest rates. Wouldn't that mean, in the end, you would get a higher rate on your paper?
While ignorance is bliss, I can't help thinking there are some long term consequences to flooding the market with dollars which are not readily apparently to me or being presented in the broader media's summary coverage.

[skids]

69. No, because that doesn't get passed along...

...to your everyday CD holder. They don't get to buy into the huge deals needed to leverage this credit line.

The only people that benefit here are the ones who spend all their time shuffling papers and when a deal comes along where the fed is lending out money at sub-inflation rates, they can borrow it, flip some switches, and pay it back later having made money off of it. That takes time, and it takes the ability to get a lot of credit (note it doesn't take capital, just the ability to borrow it over and over in the right order.)

The only way joe six pack can get in on that action is when they are so desperate to keep the bubble going that they slash home loan rates, and he still needs to have enough resources to beat the loan rate somehow which would have to be something other than hoping for a raise which isn't coming. Not that "that action" is anything but deplorable, but essentially what is happening is a power grab.

[closeupready]

44. The pessimistic part of me says our economy is collapsing.

:(

[mountainvue]

68. I would have to agree with you there. And I'm generally not

a pessimist.

[mile18blister]

45. Historically, October is the worst month for the stock markets.

1929, 1987 and other big crashes happened mostly in October. If things are bad now, just wait a couple months.

[NYC]

56. Is there a reason

October is the bad month?

[Raejeanowl]

61. One Theory

October is first month of new government fiscal year, "corrections" and other reactions happen based upon perceived surplus/deficit incurred in preceding year?

Bottom Line: I don't know, either, and I sure wish someone who really knew would explain it to me, too!

[NYC]

71. I thought the fiscal year ended 6/30.

Maybe that's NYC?

I suppose I can Google that.

Furthermore, nearly 80% of the government corporations that have a September 30 year end also met the accelerated deadline one year ahead of schedule.

That's an excerpt from:

http://www.whitehouse.gov/omb/financial/2006_report.pdf

I just picked one of the smaller files to open.

[AX10]

55. If the Feds have to use direct intervention to prop up the markets...

then something bad is happening as we speak. The money from the private sector has been dried up. Between the sub-prime disaster and hedge fund collapses, a ton of money has been lost in the past few months.

[MilesColtrane]

60. Instead of allowing the bubble to pop now...

...Bernanke is pumping more air into it.

Hope there's room under the overpasses for 7 million American families. :mad:

Christ. Why is it that every time Bush goes to Crawford there's a terrorist attack, a hurricane, or an economic meltdown?
You would think that the further away from the White House he was, the better for our country.

[Gin]

64. how is this different than the S&L bailout? We are all paying for this too.

g

[MilesColtrane]

66. Not with actual tax dollars yet, but that is coming, I think.

It's only a matter of time before there is some kind of legislation designed to help keep the mortgage companies afloat in the face of increasing foreclosures.

It will be sold as being in the national economic interest. The big companies that finance the subprime lenders are begining to feel the pain as these companies go belly up, and they contribute way too much money to Congress not to get some kind of bailout for their largesse.

BushCo™, on the other hand, is merely screwing us by stimulating inflation and threatening the value of the dollar in the name of propping up the market.
Another regal redistribution from the working man to the institutional investors.