Goldman May Be the Fed's Consigliere, But JPM is Still a Capofamiglia

Bloomberg
Fed to Provide Up to $540 Billion to Aid Money Funds
By Craig Torres and Christopher Condon

Oct. 21 -- The Federal Reserve will provide up to $540 billion in loans to help relieve pressure on money- market mutual funds beset by redemptions.

``Short-term debt markets have been under considerable strain in recent weeks'' as it got tougher for funds to meet withdrawal requests, the Fed said in a statement in Washington. About $500 billion has flowed out of prime money-market funds since August, a Fed official said.

The initiative is the third government effort to aid money- market funds, which in stable times are a key source of financing for banks and companies. The exodus of investors, sparked by losses from the aftermath of the Lehman Brothers Holdings Inc. bankruptcy, contributed to the freezing of credit that threatens to tip the economy into a prolonged recession.

``The problem was much worse than we thought,'' Jim Bianco, president of Chicago-based Bianco Research LLC, said in a Bloomberg Television interview. Policy makers are trying to prevent ``Great Depression II'' by stemming the financial industry's contraction, he said.

JPMorgan Chase & Co. will run five special units that will buy up to $600 billion of certificates of deposit, bank notes and commercial paper with a remaining maturity of 90 days or less. The Fed will provide up to $540 billion, with the remaining $60 billion coming from commercial paper issued by the five units to the money-market funds selling their assets, central bank officials told reporters on a conference call...

Time to Put Away Childish Things

When I was a child, I spoke as a child, I understood as a child, I thought as a child: but when I became a man, I put away childish things. 1 Cor 13

'Childish things' in this context refers largely to the level of political discussion about the fall elections that is going around these days, although the behaviour of the US financial system and our government is a close second.

(Before the usual wiseguys chime in, this site is intended to include parody and exaggeration as comic relief and an instrument of satire, in addition to seriously dispassionate commentary, unlike the White house and the Congress and Keith Olbermann and Fox News. - Jesse)

Its all personalities, frivolities, simplistic slogans, appeals to the lowest common denominator, avoidance of the serious issues, and not so subtle propaganda. Its time to start acting like this country is in serious difficulty, and the decisions that we make could affect the world for a generation. We are at a crossroads, a moment in history, and we will now decide the fate of the legacy of freedom granted to us by the blood of our forefathers.

This thoughtful piece by Yves Smith expresses the concerns many have over the Treasury proposal fairly well.

Why You Should Hate the Treasury Bailout Proposal

One thing is of special concern if you think about it a bit. How could the Bush administration have had even the arrogance to put this clause in the draft in the first place? If you think this is some poor wording or just overreach by Henry Paulson you have not been paying attention to current events for the past eight years.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

If this proposal passes, we need to vote out all Republicans and the Democratic leadership, and anyone who votes for this, in the November elections.

"When bad men combine, the good must associate; else they will fall one by one, an unpitied sacrifice in a contemptible struggle..."
Edmund Burke

Time to step back, out of the day to day push and pull of arguments, fears, petty jealousy, prejudice, complacency, sloth, greed and envy. Time to take a stand, to do something. This applies equally to America and to the rest of the world.

As in past moments of history, ultimately there will be no bystanders.