Fed aid going to places we were not told it would be going to.

[Perchoutofwater]

Fed Aid goes to GE, Harley, Verizon, and foriegn banks.

 

The more I see and learn about the Fed the more I think it should be abolished.

[wiegie]

This news only surprises you because you didn't (and still don't) understand the severity of the financial crisis we experienced. The Fed's lending of money to the entities you described above was no secret.

 

http://www.ny.frb.org/markets/cpff_faq.html

 

You should literally thank your lucky stars that the Fed undertook the actions that it did or else we WOULD be in a second Great Depression.

 

(And everyone else should also see now why it is a good thing that the Fed is independent of the governent: Had the Fed been subject to the political process there is no way that it would have been able to undertake the actions that it did because there would have been no political will to do so due to people like Ron Paul, Perch and their ilk not understanding why such actions were necessary.)

Edited December 2, 2010 by wiegie

[Perchoutofwater]

Do you see this as a legitimate role of government?

[Avernus]

This news only surprises you because you didn't (and still don't) understand the severity of the financial crisis we experienced. The Fed's lending of money to the entities you described above was no secret.

 

http://www.ny.frb.org/markets/cpff_faq.html

 

You should literally thank your lucky stars that the Fed undertook the actions that it did or else we WOULD be in a second Great Depression.

 

(And everyone else should also see now why it is a good thing that the Fed is independent of the governent: Had the Fed been subject to the political process there is no way that it would have been able to undertake the actions that it did because there would have been no political will to do so due to people like Ron Paul, Perch and their ilk not understanding why such actions were necessary.)

 

 

Maybe we should just let the depression happen so we can get it over with already...because all we are doing is encouraging the problem by throwing more money at it..

[wiegie]

Do you see this as a legitimate role of government?

the Fed isn't part of the government

[Perchoutofwater]

the Fed isn't part of the government

 

Strictly speaking you are correct, but it is so intertwined with the government it is hard to differentiate one from the other. It only operates with the blessing of the government, and it's board and chairman are appointed by the President and must be confirmed by the senate.

[Jackass]

Maybe we should just let the depression happen so we can get it over with already...because all we are doing is encouraging the problem by throwing more money at it..

 

You want to sell apples on the street corner? I sure don't.

[Ursa Majoris]

Do you see this as a legitimate role of government?

What, preventing a slide into depression? Um....yes, I absolutely do.

[Perchoutofwater]

What, preventing a slide into depression? Um....yes, I absolutely do.

 

Preventing a depression, or prolonging a recession (yes I know not in technical terms)? What are the long term affects of these policies going to be? What message does it send to the big greedy corporations that you usually hate so much, when the government or the fed bail them out? Is it OK because it's GE who owns MSNBC and GM who pays union workers who contribute to politicians you like? How would you feel if this was Haliburton or Exxon/Mobile getting bailed out?

[gbpfan1231]

I occasionally admit here that I am nowhere near as smart as most on here and don't get or understand a lot of what is discussed here - I opened myself up with that one ( if someone could please quote my message here so BP could see it I appreciate it - guess I am ignored. ). but.....

 

So what did the fed actually do here? It says they bought commercial paper from Harley like 33 times? So what did they actually do and why? Did they just infuse Harley with cash and now Harley needs to pay this back over time at a specific rate? Don't compnaies like this sell commercial paper all the time?

 

Couple of questions. Let's stay specific to Harley..

 

Why did the govt do this? Harley could not sell to anyone else?

What would have happened to Harley if the Govt did not do this?

If the answer to the above is that they would fail - why does that really matter - Harley makes motorcycles - so they fail - some other company will pick up the slack and in turn hire employees?

 

I guess I don't get what they really did here so I have no opinion on if it was right or wrong.

[wiegie]

A company like Harley often carries some sort of debt all of the time. Normally they finance this debt by selling commercial paper (i.e. short-term IOUs). When one set of commercial paper expires, they pay it off by selling a new round of commercial paper. And so on.

 

During the worst of the financial crisis, firms like Harley couldn't find anyone who was willing to buy their new commercial paper. And if they can't find a buyer, they can't get the funds they need to repay the commercial paper they have already issued. And they will go bankrupt. (And this bankruptcy will occur not because these firms are being shoddily managed (although in some cases they were) but rather because financial paradigm under which they had been operating for years suddenly changed on them with no notice. (It would somewhat equivalent to a household that is carrying a few thousand in credit card put has had no problems making its normal payments on the debt debt suddenly being told that they MUST repay their entire balance now and if they can't do it, then they are bankrupt.))

 

So, to prevent these firms from going bankrupt for liquidity reasons, the Fed stepped in and said "we will buy your commercial paper since we think you are still a good firm and since no one else is in a position to be able to buy your paper". The reason that they bought commercial paper from Harley 30+ times was because Harley was just rolling over its debt like it had done for years just with this time it was rolling over its debt with the Fed instead of with other lenders.

 

Yes, it is true that if Harley had failed another firm might have come in to fill the gap in the market, but it's definitely not clear how quickly this could have happened. In order to fill the gap, the new firm would have had to come up with a lot of capital itself and since the financial markets were in essence broken, it's not apparent from whom they would have obtained the funds. It was probably a much better idea to just tide Harley over until the financial markets started working again rather than let it collapse.

 

So, basically what the Fed did was step in and try to help out "main street" from being killed for really no fault of its own by what happened on wall street.

 

And, Perch, as for GE, the idea that it got a bailout because it owns MSNBC is just bat-sh|t crazy. GE is the 4th largest company in the U.S. and for the Fed to let it fail for really no good reason would have been insane. (Unless you the failure of one of the major producers of jet engines for our military aircraft is a good thing.)

[Perchoutofwater]

A company like Harley often carries some sort of debt all of the time. Normally they finance this debt by selling commercial paper (i.e. short-term IOUs). When one set of commercial paper expires, they pay it off by selling a new round of commercial paper. And so on.

 

During the worst of the financial crisis, firms like Harley couldn't find anyone who was willing to buy their new commercial paper. And if they can't find a buyer, they can't get the funds they need to repay the commercial paper they have already issued. And they will go bankrupt. (And this bankruptcy will occur not because these firms are being shoddily managed (although in some cases they were) but rather because financial paradigm under which they had been operating for years suddenly changed on them with no notice. (It would somewhat equivalent to a household that is carrying a few thousand in credit card put has had no problems making its normal payments on the debt debt suddenly being told that they MUST repay their entire balance now and if they can't do it, then they are bankrupt.))

 

So, to prevent these firms from going bankrupt for liquidity reasons, the Fed stepped in and said "we will buy your commercial paper since we think you are still a good firm and since no one else is in a position to be able to buy your paper". The reason that they bought commercial paper from Harley 30+ times was because Harley was just rolling over its debt like it had done for years just with this time it was rolling over its debt with the Fed instead of with other lenders.

 

Yes, it is true that if Harley had failed another firm might have come in to fill the gap in the market, but it's definitely not clear how quickly this could have happened. In order to fill the gap, the new firm would have had to come up with a lot of capital itself and since the financial markets were in essence broken, it's not apparent from whom they would have obtained the funds. It was probably a much better idea to just tide Harley over until the financial markets started working again rather than let it collapse.

 

So, basically what the Fed did was step in and try to help out "main street" from being killed for really no fault of its own by what happened on wall street.

 

And, Perch, as for GE, the idea that it got a bailout because it owns MSNBC is just bat-sh|t crazy. GE is the 4th largest company in the U.S. and for the Fed to let it fail for really no good reason would have been insane. (Unless you the failure of one of the major producers of jet engines for our military aircraft is a good thing.)

 

I'm just waiting for my bailout. My woes are actually caused by the government to a large extent. Seriously though I think a company should be able to stand on it's on. If these were the practices these companies were using, I say they were just as irresponsible as the idiots out there that using your example run up all the credit card debt and can barely make the minimum monthly payments. How many times is the Fed going to step in a do this? What constitutes a big enough crises to determine that this is to be done, and who chooses who gets the help and who is allowed to go under? The government is playing favorites, and anytime a government does that in my view it is wrong. My comments regarding MSNBC were somewhat tongue in cheek, but it may explain why they are a lot easier on the government now than they were just a few short years ago.