The liquidity fix is in, although 400 billion somehow did
not work initially after a failure of a few firms as counterparties.
Taking over the banking crap by the government (the Volcker
fix) has the potential to put a long term bottom in this
market. The SEC step was dumb, because they castrated the
derivative market, and it's now limping. The troubles were
everywhere - mainly money markets, currency markets, AND the
stock markets. And looking back at this week, it looks like
without all this the markets would have crashed, the derivative
bomb went off, and 400 billion they quickly injected was not
enough to put out the fire - I think, maybe because of SEC
mistake. We'll C next week. If they make an exemption for the
MM, we'll be OK for a while, unless of course ... we get a
currency run. But we should not crash. -g-
Overall, it seems, $1-2 Trillion of additional debt to solve the banking crisis short term should not put a huge dent on US government finances. Well, it IS huge, but so is US GDP. In
comparison with US GDP it's not so huge. We can deal with it
later. |
