Fed says Stimulus May Be Inadequate

Fed chair Bernanke said that the government needs to buy troubled assets from banks, give them more guarantees in order to save growth.

What? The printing press going 24/7 will not help anymore. I can understand the need for stability in the days of failing counterparty risk (Bear Stearns, Lehman) when the Fed and US Treasury loaned and guaranteed pending trades. Both Bear and Lehman are now memories...Even the Government help finding suitors to assist bad firms (Merrill shotgun marriage to B of A). But, there is a difference with helping keep orderly markets (all done) and nationalizing all the bad investments on companies balance sheets.

GM and Chrylsler should have been assisted to the altar, not have good money thrown in after bad. The government did that with Wachovia, Washington Mutual.

The President-elect has already let it be known that he wants MASSIVE government spending and government control of more firms via the TARP and sons of TARP that will be coming. This along with the increases in taxes that the congress and executive branch will push will lead to inflation 70's style...may take 2 years before it hits full force.

In my opinion short term help to keep stable markets, even a short term loan is fine, I'm not a blind kill or be killed capitalist. There sometimes are many ripples and lots of workers that will need help. Just shutting firms and cutting all credit lines can lead to a deeper recession. However, we can not guarantee every company or industry, I'm sure in the past the loss of the blacksmith industry was a big blow too.





posted by Peter Greene