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To: Peter V who wrote (120179)	5/2/2008 10:18:20 AM
From: Peter V	Respond to of 306849

Fed expands funding, to accept more securities By Steve Goldstein, MarketWatch Last update: 8:41 a.m. EDT May 2, 2008 NEW YORK (MarketWatch) -- The Federal Reserve, along with other central banks, said Friday that it was increasing the funding it provides to banks and that, for the first time, it was willing to accept bonds backed by auto loans and credit cards. "In view of the persistent liquidity pressures in some term funding markets, the European Central Bank, the Federal Reserve and the Swiss National Bank are announcing an expansion of their liquidity measures," the Fed said in a statement. Three-month London interbank offered rate -- a benchmark for lending between banks -- was 2.78% Thursday, well above the 2% Fed funds rate. The Federal Reserve announced an increase in the amounts auctioned to eligible depository institutions under its biweekly Term Auction Facility to $75 billion from $50 billion, beginning with the auction on May 5. This increase will bring the amounts outstanding under the TAF to $150 billion. The Federal Open Market Committee also has authorized further increases in its existing temporary currency-swap arrangements with the European Central Bank and the Swiss National Bank. These arrangements will now provide dollars in amounts of up to $50 billion and $12 billion to the ECB and the SNB, respectively, representing respective increases of $20 billion and $6 billion. The Federal Open Market Committee also authorized an expansion of the collateral that can be pledged in the Federal Reserve's Schedule 2 Term Securities Lending Facility auctions. Primary dealers may now pledge AAA/Aaa-rated asset-backed securities, in addition to already eligible residential- and commercial-mortgage-backed securities and agency collateralized mortgage obligations. .

To: Peter V who wrote (120179)	5/2/2008 10:22:34 AM
From: Think4Yourself	Read Replies (5) \| Respond to of 306849

There is another way to read that Fed announcement. The credit card and auto loan businesses have deteriorated so much that the Fed is now forced to bail them out as well. Who's next for a bailout, how long before the Fed's balance sheet is exhausted, and how long before foreign investors start saying no to US Dollars? All but three short orders filled now. Think I'll take the misses out to a nice restaurant tonight.

To: Peter V who wrote (120179)	5/2/2008 10:36:42 AM
From: Pogeu Mahone	Read Replies (2) \| Respond to of 306849

May 2, 2008 State Officials Predict a Deep Recession By NICHOLAS CONFESSORE ALBANY — State budget officials said on Thursday that New York’s economy was slipping into a recession that could last through early next year and prove worse than the recession looming before the country as a whole. Laura L. Anglin, the budget director for Gov. David A. Paterson, said that key economic indicators, like falling corporate profits and four consecutive months of job losses nationally, had convinced state budget analysts that the United States was already in a recession, and that New York was soon to follow. “New York tends to lag the nation,” Ms. Anglin said. “That’s why we worry that the worst is yet to come.” Historically, recessions in New York, compared with those in the nation as a whole, have lasted twice as long and inflicted deeper job losses, according to state budget officials. Job growth in the state is expected merely to stagnate next year. The downturn appears far worse nationally than previously projected, with more than $200 billion in write-offs so far through April at major financial firms and 63,000 layoffs in the financial and insurance sectors. On Wall Street, which supplies one-fifth of the state’s tax revenue, bonuses are now expected to be down 11 percent this fiscal year, after a small decline last year and a 25 percent increase the year before. Those forecasts were paired with sharply more pessimistic tax revenue forecasts for the coming years, which Ms. Anglin — echoing Mr. Paterson’s recent calls for more budget cuts — said would require drastic reductions in state spending. Over the past nine months, the state has revised its projections for this year downward by $1.7 billion. “The typical New Yorker is tightening their belts,” Ms. Anglin said. “They’re feeling the crunch of higher prices; they’re having to manage their resources better. I think that the typical New Yorkers should know that we’re aware of that and that the state needs to do the same thing.” The budget gap for the next fiscal year is projected at $5 billion. It is expected to increase to $7.7 billion in the 2010 fiscal year and $8.8 billion in the 2011 fiscal year, according to the budget office, approaching levels not seen since the recession that followed the 9/11 attack, which all but put Lower Manhattan out of business for months. Without the budget cuts already planned for next year, Ms. Anglin said, spending would increase by 10.2 percent over this year compared with revenue increases of only 2.7 percent, a level she described as “not sustainable.” Because of steadily increasing state spending, Ms. Anglin said, even a quick economic recovery would not necessarily ameliorate future budget gaps. Mr. Paterson sought and won hundreds of millions of dollars in additional cuts from his commissioners and agency heads soon after succeeding Gov. Eliot Spitzer in March. And last week, he suggested that he wanted the Legislature to take the unusual step of reopening the budget to seek more cuts for next year and after. The just-approved budget increased spending by 4.8 percent over all for the current fiscal year, with significant increases in school aid, upstate economic development and capital improvements to the state university system. Medicaid continues to be a major state expense. Not since former Gov. George E. Pataki’s first term has New York actually cut spending, said Edmund J. McMahon, director of the Manhattan Institute’s Empire Center for New York State Policy, which advocates lower government spending. Mr. Paterson, he suggested, would need to do the same. “The budget gaps are clearly spending-driven. And the budget gaps were made worse by the budget they just did,” Mr. McMahon said. “The school-aid spigot is going to have to be turned off. And he’s going to have to fight his own battles on Medicaid.” Home World U.S. N.Y. / Region Business Technology Science Health Sports Opinion Arts Style Travel Jobs Real Estate Automobiles Back to Top Copyright 2008 The New York Times Company Privacy Policy Search Corrections RSS First Look Help Contact Us Work for Us Site Map