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"In fact, the Fed is at present much more interested in supplying dollars than in buying them. It has committed itself to providing liquidity to the banks at rates closer to zero per cent.
The banks can then presumably lend this money to households and firms at much higher interest rates and pocket the difference. For example, the mortgage rate in the US has been hovering around five per cent.
While getting near-free money from the Fed and then being able to lend it at five per cent provides enormous potential for profits (and large bonuses and salary increases for top management), it also reflects the high risk of default the banks perceive as a threat, given the defaults that have taken place on past lending."
So having participated KNOWINGLY in the fraud foisted on the U.S. public, the banks are now worried about their bottomlines. And the ObamaRahma Admin is quite willing- hell, the Admin is encouraging them- to provide support for the financial industry all the while U.S. citizens are going without food and jobs and losing their homes. And sending the country into more debt with a war that does nothing except avoid dealing with the Durand Line issue that is the root of the problems in the AfPak region. Oh, yes, it also kills those we don’t want to acknowledge the humanity of.
"If inflation is not a real danger then why is the dollar depreciating? Since 2002, the US government deficits have been mounting as have the trade deficits. These two trends have brought about a long-term average decline of the dollar in spite of several short-term upswings.
Part of the new dollar crisis can be attributed to new monetary policy from the Fed which is to lend money to the member banks in the US at virtually 0 per cent. This has enabled these banks to invest some of that money in the high-performing emerging economies in Latin America and Asia where the rate of return is much higher than what can be earned in the US. This is called the dollar "carry" trade."
How long will it be before U.S. citizens call bullshit on the ObamaRahma Admin?
6 Comments
Thanks for the article, ubetchaiam (I’m afraid the link is no good).
“invest some of that money in the high-performing emerging economies”
So the US Taxpayer goes (deeper) into debt so banks can make a profit stimulating the economies of other nations?
Try this link http://english.aljazeera.net/focus/2009/11/2009113083115721105.html
You have it right, but the American People are convinced that this needed to be done.
The Government should have closed those banks, and used the money to start a Governnment backed Bank, which could and would have been lending meaning the recession would have not gotten as deep.
The should have made those Banks work out those mortgages they call toxic assets, or be closed. Either fix what You caused or give up the ship.
We bailed out not only the Banks but the Foriegn and Domestic investors who were fools, and bought into the Banking and Wall Streets scam. Yet were unwilling to bailout the American People who were taken to the cleaners by this scandle.
The people should be up in arms, but are still content that their Government is working and will fix the problem. They are forgetting that without the Government’s or the Congress’s actions this scandle could not have happened. So again they are trusting the people who caused the problems to fix them. This is true insanity, but the people will continue to trust them, and probably re-elect the same people to office.
We still see people supporting the very people who enabled Bush and Cheney, and caused the wars, debt, and crisis’s that we have experianced.
“The people should be up in arms, but are still content that their Government is working and will fix the problem.”
That’s because they’ve been trained to depend on the government to run their lives, rather than for them to control the government.
True but intelligent minds are supposed to be able to think, not be trained and follow like lemings.
And how intelligent and how well informed is the average voter? I’m assuming a 100 IQ, maybe two TV news shows and a daily paper?