Tuesday, October 7, 2008
As many people warned (including me - here and here), the bailout and the "loaning" of trillions of dollars through the Fed's Open Market Program will not free up liquidity because the banks are hoarding cash.
Bloomberg confirmed this today in an article entitled "Money-Market Rates Climb as Banks Hoard Cash, Crisis Deepens", which starts with these words:
Money-market rates climbed worldwide as banks hoarded cash on speculation the seizure in credit markets is deepening and may prompt more financial institutions to collapse.
As I also warned, the bailout would not reassure companies or investors. Just look at the stock market in the U.S. (or any other country) and you'll see it hasn't reassured anybody, except a couple of Paulson's closest buddies who stand to make billions from it.
Can we cancel the bailout now? It has already been proven to be totally worthless in solving our economic problems.
Congress can enact a new law rescinding the bailout.
If you think its not politically realistic to cancel the bailout now that it has been passed, let me ask you this . . . is it politically realistic to increase the chances that we will be hit with a great depression? Or that the county be bankrupted? Because that's what top economists and government officials are warning the bailout could do.