Fed Adds $300 Billion to Term Auction Facility

This is on top of the $330 billion increase in dollar swap lines we mentioned this morning.

From Bloomberg:

The Federal Reserve will pump an additional $630 billion into the global financial system, flooding banks with cash to alleviate the worst banking crisis since the Great Depression.

The Fed increased its existing currency swaps with foreign central banks by $330 billion to $620 billion to make more dollars available worldwide. The Term Auction Facility, the Fed’s emergency loan program, will expand by $300 billion to $450 billion. The European Central Bank, the Bank of England and the Bank of Japan are among the participating authorities….

“Today’s blast of term liquidity will settle the funding markets down, and allow trust to slowly be restored between borrowers and lenders,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. On the other hand, “the Fed’s balance sheet is about to explode.”

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  1. Sammy

    > "Today's blast of term liquidity will settle the funding markets down, and allow trust to slowly be restored between borrowers and lenders"

    Where do they come up with these guys and their happy horseshit? Trust is not coming back to the money markets. Why do they keep lying and blowing sunshine up our asses?

  2. John Law

    You american shall pass a trillion dollar Bill to build new railway,factories,highways,reserviors,new electrcity networks,subway,new nuclear plants. You still have technologies the chinese want.These stuff can be used for the future. Not wasted money on toxic debt that is useless and cannot create any job.
    Vote for the republican, they are real american. Hank Paulson that is a arrogant guy who want to become King of Wall street.Vote Against those that agree the to the $700 Billion Bailout.

    PS:I am a chinese.

  3. Anonymous

    Yves and other commenters: does anyone have insight on any limits the Fed has in providing this much liquidity? Can it just print money ad infinitum or does it need to get new capital from Treasury / Congress at a certain point?

  4. a

    “the Fed’s balance sheet is about to explode.”

    IMHO this is even more important than the failure to pass the bailout bill. The Fed could be about to go under. That’s pretty scary.

  5. Richard Kline

    As in the query of Anon of 5:38, there has to be a suspension of disbelief in the Fed’s ‘action.’ They patently don’t have the number they are quoting, and there is no way to get it that isn’t massively inflationary in impact. If the idea is to offset a deflationary vector in (hyper)inflated asset prices by a severely inflationary monetary action, Bernanke will be proven as wrong in this as in all else. He won’t save asset prices, but he will napalm the rest of the financial system trying. —But even that is better than the Paulson proposal, which was/is truly Godawful in design, process, and projectible outcome. Let Ben print, until our creditors stop carrying our anchor and chain around for us and pitch it overboard to save themselves. Why am I seemingly sanguine re: that outcome? Benjy Bagman was going to print _anyway_, so much has been clear, and until he is removed that outcome was near certain. So, like it or not, let’s get on with it.

  6. Anonymous

    When you say ‘Fed’ I think you are referring to the Federal Reserve Board. There are many ways they inject liquidity into the system. By selling US treasuries, exchanging worthless paper for US treasures or both of which are usually reported daily, weekly, monthly, etc. Unreported is the Federal Reserve selling Treasuries (as an example) to Japan which in turn exchanges them for stocks maybe on the US markets thus propping up the stock price. All these operations transpire while the US Treasury watches and/or directs. There is also the presidents Plunge Protection Team that operates in the same manner but more in a stealth fashion. It’s great if say China is buying all the Treasuries issued but no matter the operations continue even if the taxpayer funds the US internally. Just watch the US$ chart’s long term trend, more dollars in the system due to these operations (bailouts, windows, etc.) the less value the dollar has .

    $650 billion just today 1 trillion last week.

  7. Massimo M.

    Without going into depth which at this point would be like trying to understand where the spider started its web…I would simply say this is the result of pure and wreckless speculation and the work of incompetent buffons…declaring numbers and results as if they’re trying to come up with lottery numbers. I am not American but I am very happy and satisfied the bill was not passed…thank god! And I hope it never passes!

    At this point it’s better if the shit hits the fan so we can all learn from this (futile greed and lack of basic ethics)…although I believe the wrong people will be punished for the workings of these ‘banking buffoons’…with this I am referring to investors which work for their money and create tangible wealth for themselves and others…not creating virtual wealth on paper!!! and then get paid much much more than what they created…in the end, they were actually paid for destroying wealth and financial stability.

    I suggest getting all those pro-bill bankers, speculators, politcians, media people (i.e. CNBC…it’s ridiculous how they use 20 ‘colourful and extravagant’ words to describe something when the BBC or other European media use 5!?!) and dear old Mr Georgie Bush to get a real job instead trying to get people to bend-over just one more time just because the first time it didn’t go in far enough….yeah, lube me up!

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