China syndrome

Fed to Buy $1 Trillion in Securities to Aid Economy

By EDMUND L. ANDREWS

Published: March 18, 2009

WASHINGTON — Saying that the recession continues to deepen, the Federal Reserve announced Wednesday that it would pump an extra $1 trillion into the mortgage market and longer-term Treasury securities in order to revive the economy.

The Federal Reserve slashed its benchmark interest rate to virtually zero in December, declaring that it would keep the rate at that level for “some time” and focusing its additional efforts to revive the economy on a wide range of new lending programs. ( The Fed Funds Rate, G )

The program will start out by offering $200 billion worth of financing for consumer loans, small business loans and some corporate purposes like equipment leasing.

SOURCE: nytimes

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 "extra $1 trillion into the mortgage market and longer-term Treasury securities in order to revive the economy."

Buying treasury securitues by the FED, in the billions of dollars, Buying them in the open Market.

Paradigm Intel suggest that China wants to sell some of its American Treasury Paper,

But where is this money coming from? 

Creation of money out of thin air will put deflationary pressure on the value of the currency and Inflationary pressure on prices. Who's Idea was this? Its a bad one, and smells of desperation.

But on who's part, Feds or China?

If its China that wants out of the Treasurys, its a bad move on their part.

Their currency is pegged to the US Dollar, and they are shooting themselves in the Foot,

and, maybe the leg.

I would expect China to press for prosecution of banking 

CEO's that fed this sub-prime debacal knowingly.

And then pursue them in Civil Court for damages.

So far no one has been held responsible for 

for their criminal activities.

G

Series 7 & 13

update:

The Fed will buy up to $US300 billion ($446 billion) in long-term Treasuries over the next six months, it said. 

The additional mortgage-backed securities purchases will push the Fed's mortgage-related facility to as much as $US1.25 trillion. 

The Fed also said it would increase the size of its agency debt purchase facility by $US100 billion to $US200 billion. 

Federal Reserve to buy up to $US300bn in US bonds

Addendum:

China has a surplus, they have been tightening up on credit and bank loaning.

With the advenbt of Globalization,we have become a world economy.

The world economy ship has a hole in it. China thinks its compartments are safe

as they have no hole in their compartments. But if the economic ship goes down

they go with it,

AT some point China may need to come forward and support 

the world economy and help bail the ship ort.

Or we all sink.

Gerald

Series 7 & 13

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