CrocodileChuck

FYI:

Louis Crandall, an economist with Wrightson ICAP LLC, a Wall Street money-market broker, says the Fed's interventions also have the potential to clog up the balance sheets of banks, its main intermediaries.

"Finding alternative funding vehicles that bypass the banking system would be a more effective way to support the U.S. credit system," he says.

Some private economists worry that Fed-issued bonds could create new problems. Marvin Goodfriend, an economist at Carnegie Mellon University's Tepper School of Business and a former senior staffer at the Federal Reserve Bank of Richmond, said that issuing debt could put the Fed at odds with the Treasury at a time when it is already issuing mountains of debt itself.

"It creates problems in coordinating the issuance of government debt," Mr. Goodfriend said. "These would be very close cousins to existing Treasury bills. They would be competing in the same market to federal debt."

With Treasury-bill rates now near zero, it seems unlikely that Fed debt would push Treasury rates much higher, but it could some day become an issue.

There are also questions about the Fed's authority.

>> I'll be back

Excerpt;

"The road to ruin for this snowy North Atlantic island, featuring a pit stop at Fort Worth's AMR Corp., was paved with American-style capitalism.

Over the last six years, a group of about two dozen young, U.S.-educated financiers took Iceland on a Viking voyage of acquisitions, grabbing airlines, banks, mortgage lenders and securities traders from Texas to Hong Kong.

One of the new Vikings was Hannes Smárason, an MIT-educated McKinsey & Co. veteran in his early 40s. In 2004, Mr. Smárason led a group of investors who bought Icelandair. The airline had a large cash pool to cushion it from shocks in fuel prices and ticket sales. Mr. Smárason, as head of a holding company called the FL Group, used that cash to go on a buying spree."

http://www.dallasnews.com/sharedcontent/dws/bus/stories/121108dnbusiceland.31cc1d2.html

i on the ball patriot

~~~~

Does the leverage of the US banks include toxic level 3 assets as capital ?

Annals of “communications policy”, July 15 2008 edition:

“If you have a bazooka in your pocket and people know it, you probably won’t have to use it.” — Hank Paulson

Oops. I seem to recall the markets called Paulson’s bluff, and then some.

Once unleashed, inflation will roar, with apocalyptic consequences for the dollar and much else besides. The worst part is, Rogoff may be right that this disastrous scenario is in fact the the lesser evil, since default is the only alternative. Since a man of his accomplishments can’t possibly be as obtuse as he comes across here, he is knowingly lying about the endgame because he couldn’t sell it otherwise. That’s the trouble with lesser evils, though: in the end, they’re still plenty evil.