17 Aug 2009

Fed Continues With Leeches, Can’t Understand Why Patient Is Moribund

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CNBC tells us:

The Federal Reserve said Monday it will extend its Term Asset-Backed Securities Loan Facility another six months though it said conditions were improving in some areas.

In a joint announcement with the Treasury Department, the central bank said the TALF, as the program is known, now will run until June 2010, from its original cutoff date of December 2009.

“Conditions in financial markets have improved considerably in recent months,” the Fed and Treasury said in their statement. “Nonetheless, the markets for asset-backed securities backed by consumer and business loans and for commercial mortgage-backed securities are still impaired and seem likely to remain so for some time.”

The extension will cover newly issued commercial mortgage-backed securities but will not be expanded to cover assets not already eligible.

The program targets primarily students loans and credit cards but extends to other financing as well.

The TALF started in March and figures prominently in efforts by the Fed and the Obama administration to ease credit, stabilize the financial system and help end the recession.

Gee, isn’t it ironic that the economy keeps getting worse, “despite” the unprecedented rescue efforts of the Fed and Treasury? I mean, it’s almost as if printing up green pieces of paper, and having politicians borrow trillions of dollars, actually makes it harder for the economy to re-coordinate itself after a bursting asset bubble. If we didn’t have fact-based economic scientists on the case, I’d start to worry.

Not to beat you over the head with this graph, but it’s relevant in this post too:

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