The Federal Reserve introduced two new programs to help out the consumers in this crisis.
The first program details how the Federal government will buy up to 100,000,000,000 ( or 100 billion) dollars with of debt issued by govt.-sponsored morages enterprises (Fannie, Freddie, and Federal Home Loan Banks) and up to 500,000,000,000 dollars of mortgage securities backed by Fannie, Freddie and Ginnie Mae.
Program number two lauches a 200,000,000,000 dollar facility to "support consumer finance, including student (woot!), auto, and credit card loans and loans backed by federal Small Business Administration" which will lend to investors who hold securities backed by this debt. There is a safety net as well! (gasp!) $20 billion will come from the $40 billion in allocated funds from the $700 billion rescue fund that will help cover any losses the Fed might face.
Hopefully by detracting from the massive amounts of debt plaguing American citizens people will begin to invest again and American will find itself moving back onto the track to economic prosperity. I can only hope the government has found someway to pay for this and/or will be making cuts accordingly otherwise we may rescue the populus only to have to dig the government out and there will be inflation like nobody's business but with any and all luck we won't be using it to fuel our fires or as toys any time soon.
Cross your fingers and hope we make it out of this with both economy and global reputation/status intact.
Tuesday, November 25, 2008
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3 comments:
Well, frankly I have no idea if this will work. However I do know that right now the American public is begining to become really angry at all the money being thrown at big buisness and banks. So while, it may not necessarily fix the economy it will probably make some progress towards improving the mentality of the American public. I know I feel a little less resentful towards the government, especially since I'm preparing to go off to college and will potentially need to take out a student loan.
i agree with Aimee..too good to be true. but i hope it does work out because being a student and trying to go to college. don't even get me started..student loans? state school turning away kids? budget cuts?
omgsh :[
the federal reserve wont work. it has never worked and it has put our country and caused the recession in the first place. pumping more money into the economy wont fix it, it will just cause inflation. when the government lent out money from the federal reserve, business thought they were in times of great economic growth. in reality, the government can not forever lend out money and business started to understand they were not in such a big boom after all. they start to withdraw from investments and save their money and the whole economy falls.
pumping money into the consumer market is an even greater waste of money. as soon as this market hits its intended targets it will be stored away and saved, just giving free money away isnt going to fix anything. the government is continuously wasting the tax payer's money at this point.
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