The Fed’s Unprecedented Failure to Bolster the Banking System
The national news is frightening these days. I’m not about frightening here. However, I’m not about ignoring the world around us either. While we are so far in a much better position than most of the nation, we are impacted by what happens to the market nationally. The voices that were claiming (hoping) the national situation wouldn’t have too much impact here have pretty much gone silent.
The following video illustrates the extraordinary and historical amount of printed money the Fed has dumped into the banking system that has yet to get banks lending. Banks have money. But it is not easy to get a loan. The banks are sitting it out. They know how awful many of their financial situations are. They know option ARM recasts the next couple of years are going to be bad. For many banks, the asset side of their balance sheets is going to suffer when overpriced real estate enters foreclosure and they have to mark it to what it will fetch on today’s market. So, many of the banks are holding onto the TARP money so that they can bail themselves out.
I am optimistic and know that anything can be fixed. I am also not blind and am concerned what this will cost all of us, and our children. Speaking for myself I will proceed, but carefully.
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