Economic meltdowns, I luv em, I think I'll vote Republican!

[BootinUp]

:sarcasm:

http://www.nytimes.com/2008/09/19/business/worldbusiness/19centbank.html?_r=1&hp&oref=slogin

Fed Offers $180 Billion for Ailing Money Markets

By MATTHEW SALTMARSH and KEITH BRADSHER
Published: September 18, 2008

Reflecting concerns about the health of the global financial system, the Federal Reserve and the world’s other major central banks significantly escalated their assistance to global markets on Thursday, making almost $200 billion available after bank lending came to a near halt and threatened the global economy.


Analysts are starting to talk about the need for much more intervention from Washington, warning that Thursday’s move would not provide a quick fix to unlock bank lending.

Writing in The Financial Times on Thursday, Kenneth S. Rogoff, the former chief economist at the International Monetary Fund, said the United States would have to spend 5 to 10 times as much as it already has on bailouts, an amount closer to $1 trillion to $2 trillion.

snip

Such a rescue would dwarf the huge bailout of the American financial system in the 1980s by the Resolution Trust Corporation, a government-owned, asset-management company charged with liquidating assets of thrifts and the Japanese government’s mass purchase of bad debts from banks during the 1990s.

[DJ13]

1. making almost $200 billion available after bank lending came to a near halt

The Fed has regulations in place that allows them to make direct loans to consumers when banks cant or wont.

Section 13(3) of the Federal Reserve Act ......to lend to “any individual, partnership or corporation” in “unusual and exigent circumstance” provided the borrower “is unable to secure adequate credit accommodations from other banking institutions.”

The problem with direct bailouts to the financial institutions is that they arent taking the money and making loans, they're hording it.

The Fed should bypass the banks if they fail to maintain a sufficient amount of new consumer loans so that our consumer driven economy doesnt crash due to the banks no longer loaning money.