Monday, October 6, 2008

Fed Pumps $900 Billion With TAF To No Avail

Today, we are seeing the beginnings of the true failure of the banking system. The Federal Reserve has transitioned from the lender of last resort to the central bank. In fact, the Fed has now attempted to lend to banks in one day a sum greater than its entire balance sheet--and failed. Naked Capitalism and others reported that the Fed lending facilities have actually become counterproductive, and today's evidence significantly substantiates their hypothesis. Here, I will attempt to construct a quick time line of the most recent events over the weekend, so as to get a sense of how we got here:
So, my analysis, in keeping with the non-hyperbolic traditions of this fine blog: The world is melting.

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