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Politics : View from the Center and Left
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To: Steve Lokness who wrote (90876)10/20/2008 2:32:27 PM
From: Dale Baker  Read Replies (1) of 541139
 
Since we are the world's reserve currency, the Fed can expand its balance sheet enough to prop up our main financial institutions; we don't have to BK Citigroup and the other big banks even when they get in trouble. We can afford to step in and prop them up.

Smaller countries with a weak, illiquid currency get crunched in a storm like this month brought on all of us.

Eventually the bailout will restore enough confidence for an orderly deleveraging of risk in the US system, without too much more major damage. The big blowups (AIG, Lehman, Bear Stearns) are mostly behind us, I think.
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