Fed Reserve Bank Comes to the Rescue and Piles on Liabilities

The "Real Time Economics" section in The Wall Street Journal has an overview showing how the assets (and liabilities) of the Fed Reserve Bank have grown since the start of this crisis. These assets no longer have to be marked to market values so there is no way to know what these are worth, but we do know how much cash the Fed let out. This ballooning letting out is what causes inflation.

I've broken out each additional burden the Fed Reserve has taken in separate charts below. Click to enlarge each chart.

Chart 1 - $0


Chart 2- add $48 billion for every day credit lines the Fed gives out


Chart 3 - add $508 billion to buy US treasuries; this is ongoing


Chart 4 - add $56 billion given to federal agencies


Chart 5 - add $237 billion to purchase mortgage-backed securities; new


Chart 6 - add $529 billion, direct lending starts (you notice how this has not happened before)


Chart 7 - repurchase agreements with companies looking for immediate liquidity


Chart 8 - $117 billion for AIG and Bear Stearns


Chart 9 - add $314 billion for central bank liquidity swaps with other central banks


Chart 10 - add $255 billion for more lending to banks


Chart 11 - add $5 billion to start TALF, Secretary Geithner's plan to buy up bad bank debt

Without a roof over our heads - the state of America

The New York Times ran a photo series showing the makeup of homeless encampments sprouting up across the United States. These pictures and descriptions are taken from that series.

The first picture to the left underneath a clear, sunny California sky might look to you like a nice camping trip. The tents all look like they are from REI and then there's the idyllic American River to the left. But this picture is actually of a camp site made up of families and individuals that have only recently become homeless because of the housing crisis that has engulfed the United States.

“They just popped up about 18 months ago. One day it was empty. The next day, there were people living there.” - Paul Stack, operators manager at outreach center

The next photo is of a young woman. According to the article this is Tina Garland, "an out-of-work truck driver, in the kitchen area of the tent she shares with her husband in Sacramento."

Think about this for a moment. She has skills but can't find a job. She is married but her husband is also unemployed. Their only recourse is a tent.

Is this the America we want?


Next up is a man sitting on a cot. According to the article, "Doug Brown, a freelance electrical engineer, moved to the shelter at Village of Hope in October after losing his job. He shares his tool shed with another person."

There's a pattern here folks. Skilled people are unable to find jobs. The American economy isn't working and the social safety net isn't able to help us avoid becoming homeless. So what kind of social safety net do we have?



Next up is a photo of a young man in his mid-20s standing by a fire. According to the article, "Daniel Kent, 27, has been living in a encampment called Taco Flats in Fresno for three months after running out of money."

We read in the history books that Americna in the late 1920s and 1930s was dotted with "Hoovervilles," homeless cities named after the presiding man in the White House, President Herbert Hoover. Who among us thought that we would see these kinds of tent cities rise again in our lifetimes?

America's social safety net is ill-prepared to handle the recession we are in. There are some politicians in Washington and in our state capitols that are taking note and hopefully they will put emergency measures in place to rectify this growing problem now. Why do only Wall Street investment firms and banks get bailouts?

This problem is big and getting bigger. And if you think it can't impact you, take another look at those pictures.

Sheila Bair - Ready for the Job

If Tim Geithner does lose support from Republican U.S. Senators (many are already calling for his ouster) the person to replace him as U. S. Secretary of Treasury should be Sheila Bair, current chair of the FDIC.

Her clarity of vision on why we are in this Wall Street created economic quagmire and incredible articulation about how we get out is second to none.

I found her recent testimony to Congress a breadth of fresh air. She is saying look, we know how to clean up and regulate banks at FDIC, Congress gave us authority years go. What has been lacking is the political will to regulate non-banks. And so non-viable financial institutions like Citi Group are hanging around thanks to tax payers while viable banks - which also tend to be smaller - are at a competitive disadvantage.

There is no one in the federal government who is presenting the problem and the solution as clearly as Sheila Bair. She should be in-line to be Secreatary of Treasury and the way to get her in-line is for President Obama to appoint her to one of the deputy posts now vacant.