Busted: Bankers and The Global Economy

March 12, 2008

Good News for Bankers and Investors

Filed under: banking, central bank, federal reserve, government, investment — Tags: , , , , , , , , — digitaleconomy @ 9:01 pm

In an unprecedented move yesterday, the Fed was credited for the best day in the U.S. stock market for quite some time. The Federal Reserve is in the minds of bankers, economists and government officials, bankrolling the largest economic bailout of all time. The bankers are elated because it would seem that the payback for their impropriety will be completely dismissed and forgotten forever. Whether this is true or not, the financial services world feels very good and the market once again has a spring in its step.

The bailout is an amazing volume of temporary bank financing for bad securities, bonds and bank instruments. This provision is known as the Term Securities Lending Facility or TSLF, operating much like the TAF. The TAF auction is being extended from $50 billion to $100 billion. This should enable the Fed to cover a huge volume of problem bank securities and liquidity shortfalls while virtually eliminating the problem of future bank failures. The FDIC reported the closure of a small bank this week. The huge Federal Reserve system protection should protect the banking system from failure and the dreaded loss of confidence that would result from extended failures in banking. This appears to be a win-win situation for the commercial banking and financial community and would seem to allow for a large margin of safety for the U.S. economy. This is especially important politics for desperate politicians in an election year. Payback for the illusion may be more difficult.

The biggest news was apparently overlooked completely. The credit that the federal reserve was placing on the table with its sister central banks was noted by the Fed as the “G-10 central banks” . What does this move of solidarity show? Are the central bank branches just a loose, separately-owned confederation of financial corporations or something more? Does it matter? Whether it matters is a question that you will have to ask yourself. Rest assured that these new processes are being created for multiple reasons and shows the truly dangerous economic state in place. This time, enormous creativity has been brought to the table.

The good news is that this website covers that central banking corporate angle extensively that the world ignores. If you are curious, have a look around in the topics section. As usual, there will continue to be more exploration and discovery to come as more details are revealed.

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