So, let me get this straight. They could not get this $700 billion bailout passed quick enough last week, only to have the Dow do a massive see-saw all day on Monday. Seems the bailout sure is working, right? I mean, they said they needed it done weeks ago or we were all going to die – so to watch the markets react negatively to the passing was interesting. Now, the NY Times is reporting that the Fed is planning on buying companies’ unsecured debt, putting even more of our tax dollars on the line.
The Fed plan is intended to renew the flow of credit on which the economy depends. Under its plan, the central bank would buy unsecured commercial paper, essentially short-term i.o.u.’s issued by banks, businesses and municipalities. The market for that kind of debt has all but shut down in the last week, with many major corporations unable to borrow for longer than a day at a time, as banks become more fearful of giving out cash. The volume of such debt totaled about $1.6 trillion as of Oct. 1, down 11 percent from three weeks earlier.
Oh good, we are going to play the I.O.U. game with worthless pieces of paper and even more of our tax dollars. This outta shore things up, no?
“There is a growing recognition that not only has the credit crunch refused to be contained, it continues to spread,” said Ed Yardeni, an investment strategist. “It’s gone truly global.”
Ya think? I am not sure I need to be an investment strategist to see that from my living room couch, Ed. I just think that we stop all this nonsense, let the chips fall, and we deal with it. We already gave them our retirement and our kids retirement money to play with; I am not so sure I want to give them my grandchildren’s money as well.