The Federal Reserve has offered banks another $200 billion in U.S. currency in exchange for debt that includes mortgage securities, and includes subprime mortgage loans that they hold.
Essentially, experts explain, the Fed is using the available funds to encourage confidence in these securities among investors.
But should investors be buying bad debt, not to mention the Federal Reserve throwing $200 billion in U.S. funds at these nearly worthless mortgages?
Beat the Press has another great evaluation of this latest move:
So how does this story play out? Well, insofar as the Fed is successful, the counterfeit currency retains its value for a while longer. This allows Citigroup, Merrill Lynch, Bears Stearns and the rest of the big boys more time to dump their counterfeit currency on suckers who haven’t figured out how the game is played.
Not exactly a ringing endorsement.
Read the article for a good evaluation of why bailing out the banks doesn't help anyone—it just slows down an inevitable slide by ignoring the "$8 trillion housing bubble," as Baker puts it.
Need your own bailout? Learn about filing bankruptcy.
Tags: Federal Reserve, mortgage, subprime mortgage
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