atlanta fed
delong's caveat :
"In the fall of 2008, counting the Fed and the Treasury together, a peak of 90% of Morgan Stanley's equity—the capital of the firm genuinely at risk—was U.S. government money. That money was genuinely at risk: had Morgan Stanley's assets taken another dive in value and blown through the private-sector's minimal equity cushion, it would have been taxpayers whose money would have been used to pay off the firm's more senior liabilities. ."
note treasury here added to make this
" it would have been taxpayers whose money would have been used to pay off the firm's more senior liabilities"
soprta true
after all throwing costlessly produced fed money down the drain hardly impacts taxpayers
under any scenario
another loud mouth:
"The Fed likes to say that it wasn't taking much if any credit risk here: that all its lending was fully collateralized, etc etc. But it's really hard to look at that red line and have a huge amount of confidence that the Fed was always certain to get its money back. Still, this is what lenders of last resort do.."
and so what ???
inflation tax effects ??
maybe but those are surely in no good sense to be labeled taxpayer expenses
as to the cloak of secrecy that has liberal know nothings cackling away:
yes there is a basis for delayed release of fed lending ..specifics
to private outfits
the transparency only needs to be betwen the fed and its flock of private hi fi outfits
at least with a tape delay
that is sound structuring
as to lending that is paid back without loss
that on the other hand
hardly ends discussion of emergency bail outs of private organizations
when private fortunes are at stake
if a liquidity crisis is not solved by a last resort lender loses will follow despite possible other outcomes
a credit bridge might have roduced
yes todays liquidity crisis solved may be in fact tomorrows solvency crisis avoided
and
the limitless credit lines availible thru the fed can "immortalize" any "depository institition"
or other sort of systemically crucial hi fi private op
the crux of the contradiction is however
that some firms are "allowed to fail " and others aren't
this simple reality
creates a boundary between one stage
of society wide market system and the next
each time the fed plays miracle healer for a beleaguered firm or set of firms
we are seeing the ugly distortionary blighted pre figuration of our beautiful future
