Fed’s Emergency Loan Amounts Still Increasing

November 29th, 2008

$93.6 billion daily?

Daily?

If anyone out there can explain how the dollar isn’t getting diluted on this, please, be my guest. Also, if you explain that, you might know how long these banks have to repay these loans???

I’m just trying to get at some kind of rough timeline as to how much longer this madness-on-afterburner can continue.

Via: AP:

The Federal Reserve boosted its lending to commercial banks and investment firms over the past week, indicating that a severe credit crisis was still squeezing the financial system.

The Fed released a report Friday saying commercial banks averaged $93.6 billion in daily borrowing for the week ending Wednesday. That was up from an average of $91.6 billion for the week ending Nov. 19.

The report also said investment firms borrowed an average of $52.4 billion from the Fed’s emergency loan program over the week ending Wednesday, up from an average of $50.2 billion the previous week.

The Fed said its net holdings of business loans known as commercial paper over the week ending Wednesday averaged $282.2 billion, an increase of $16.5 billion from the previous week.

Financial firms are borrowing from the Fed because they are having trouble raising money through normal channels as the financial system endures its worst crisis since the Great Depression.

Banks are hoarding cash rather than making loans out of fear that they won’t be repaid. The Fed and the Treasury have been flooding the financial system with money in hopes that banks can return lending operations to more normal levels.

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5 Responses to “Fed’s Emergency Loan Amounts Still Increasing”

  1. SW says:

    Hmmm, this USD rally has really been a shock and surprise for all. I see the USD as a very delicate balance…one tap…and it collapses.

    Suppose we have to expect the unexpected.

    Man, this is gonna get ugly!

  2. anothernut says:

    “Banks are hoarding cash rather than making loans out of fear that they won’t be repaid. The Fed and the Treasury have been flooding the financial system with money in hopes that banks can return lending operations to more normal levels.”

    And once again: why not ignore the banks, and give the $8.5 TRILLION right to us, the “consumers”? That’s ~ $28K/person for every single person in America (well, the legal ones, at least). We may hoard some, but let’s be real, most of it will be spent, thus stimulating the economy. I can’t imagine it would work worse than the current solution, and it would be a hell of a party. Kind of a “one last fling” before the apocalypse. What’s better than that?!

  3. SW says:

    Has anyone seen this before:

    http://seasteading.org/

    People are getting desperate to escape the madness of governments!

  4. tm says:

    The prophetic Irish economist/business writer Eamonn Fingleton attributes the strength of the dollar to two principle causes: the rapid growth in international currency speculation since the mid-1980’s; and the ever-increasing irrationality of these investors. According to Fingleton, the greater the volume of currency trades, the more complex and volatile the world economy becomes; the more volatile the global economy, the greater the irrationality of currency speculators, and the more likely they are to move their investments into dollars. So, the more the Fed/U.S. Treasury f*cks the world up monetarily, the crazier currency traders become. And the crazier they become, the more likely they are to put their money into U.S. dollars, thus strengthing the dollar and increasing the monetary base the Fed has to play with.

    Anyway, Fingleton made that observation back in 1999, and things of course have only gotten far crazier since then.

  5. pdugan says:

    In chronological order: ECB-Nippon-Fed co-ordinated buy, Hedge Fund reversal, CDS bubble unwinding, flight to cash, carry trade. It´ll go strong in the next month as the markets hit new lows, then reach a breaking point in late January.

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