Drink Your Liquidity Like Good Boys
DAILY PUNDIT
By Bill Quick on Economy
Providence Business News
WASHINGTON - The Federal Reserve has joined the European Central Bank in injected cash into the monetary system, as worries about the U.S. subprime mortgage market continue to drive interest rates up and cause stock prices to drop. The Fed added $19 billion in temporary funds to the banking system this morning through the purchase of mortgage-backed securities to help meet demand for cash amid a rout in bonds backed by home loans to riskier borrowers, according to Bloomberg News.
This is more than just "adding liquidity to the system." It is the beginning of the Fed's attempt to bail out the mortgage industry's big players.
I expect that, in the end, as usual, the greedy little idiots at the other end of the food chain will be left holding the bag. Which, I suppose is, if not fitting, and least expected - that's who usually ends up getting the shaft.
Meanwhile, can we say, "moral hazard?" (I know, nemo, I know…not very pragmatic, am I?) |
