i was going to have something longer, later, but

[solarbird]

Good morning.

I was going to have something longer later today, and talk about Citigroup, but, um, well, um, yikes:

Fed Pledges Top $7.4 Trillion to Ease Frozen Credit
By Mark Pittman and Bob Ivry

Nov. 24 (Bloomberg) -- The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago.

The unprecedented pledge of funds includes $2.8 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the only plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.

I need to think.

Comments

[zarq.livejournal.com]

half the value of everything produced in the nation last year

Dear lord. I can't even wrap my mind around this.

[rmd.livejournal.com]

remember! money ennobles rich people, making them strong as well as wise; money corrupts poor people, making them stupid as well as weak. (http://www.mindfully.org/Reform/2004/Republican-Propaganda1sep04.htm)

[juliansinger.livejournal.com]

This makes less than no sense.

(Well, I mean, it does, but it's just... gargantuan and uncontrolled.)

[maellenkleth]

nnnng, that's bad bad. Deflation definitely.

[lisa-marli.livejournal.com]

Bush is DETERMINED to Bankrupt this Country! Just like every business he has ever run!
Is it Jan 20th yet?

PS We just got a notice from Citibank, they are jacking up our interest rates to something obscene. Good thing we pay off our credit cards each month and so we don't have to pay it. Sorry that all our friends aren't in the same place.

[elfs.livejournal.com]

To spend is to tax - Milton Friedman.

Dear goddess, there's nothing left.

[solarbird]

ikr. I keep having these Ayn Rand moments in my head. SO FUCKED UP. It's like, okay, I don't see how the US dollar survives this. I really don't. But apparently they think it's the better idea. So, leaving aside looting (...for the moment...) I try to think about what this means. It means that they're fully aware of exactly how bad this is and are lying about the severity in public. That's good. They presumably think the dollar can survive this, when my reaction is "the dollar cannot survive this," so, how? That implies they're not just anticipating deflation but hyperdeflation.

But the only examples I can think of for that are specie currencies, metal-backed in metal-backed currency eras. I don't even know how you get hyperdeflation in a fiat currency regime. So maybe they're merely thinking significant, even severe deflation combined with a global willlingness to take large losses on dollar holdings, and it is a devaluation. But that has other srs bsns problems as an assumption.

And I think it looks like they're running a huge risk of combining recession with deflation and high interest rates on government debt, which means the cost of financing the current debt goes hyperbolic and drains still more actual value from the economy, destroys the ability of the government to react, and you end up with a combination Great Depression II and a government not in any position to do anything about it, which implies the hollowed-out non-government that gets talked about a lot in 4GW discussion environments, and I don't know how crazy you have to be to want to try to lead the government of which you're a part there anyway.

[blargh.livejournal.com]

(coughs)
(sputters)

$7.7 TRILLION?

Man.

Heeeelllo $20 trillion national debt... wonder how long until we hit $100T? $1Q?

[llachglin.livejournal.com]

Fuck this. If they need money, then they can accept partial to full nationalization with full public ownership and stringent regulations, including a requirement that they must lend the money and can't use it for salary, benefits, dividends, acquisitions, parties, business trips, toilet paper, or starting fires.

Better yet, the government should just take the money and lend it directly.

[solarbird]

Better yet, the government should just take the money and lend it directly.
This in practical effect makes the government the lender of only resort and leads directly to hell, do not pass go, do not collect $200. Unless you can get it from the government, of course.

[llachglin.livejournal.com]

There's nothing keeping the banks from lending even if the government is the lender of last resort. In fact, the economic activity produced by government lending would eventually create more lending opportunities for the banks, not fewer.

Market fundamentalism got us into this problem and it will not get us out of it. This is a problem that can and will only be solved by government.

[silussa.livejournal.com]

So tell me, has Standard & Poor put the US Government on credit watch yet?

Because just the willingness to loan that much should certainly run up red flags like there was no tomorrow....'cause there won't be if they do.

[brombear.livejournal.com]

There have been places that won't accept Government Credit cards now for the last 10 years...

[silussa.livejournal.com]

That's probably more a function of who processes (or doesn't) their credit cards. But they've pretty much moved to fleet cards for gasoline and the like now, at least, which is the angle I deal with them from.