Central Banks Float Rescue Ideas: Hold on to Your Wallet
March 22nd, 2008IMF Special Drawing Rights for toxic waste mortgage backed securities?
What’s described below isn’t going to happen tomorrow, but the banking elite are clearly thinking about how They can force all of us to eat this slop. In Russia, I hear there’s a saying that describes the situation with the mob at all levels of society:
“Everybody pays.”
Related: Modern Mafia Operates at Every Level of Italian Society
Via: Financial Times:
Central banks on both sides of the Atlantic are actively engaged in discussions about the feasibility of mass purchases of mortgage-backed securities as a possible solution to the credit crisis.
Such a move would involve the use of public funds to shore up the market in a key financial instrument and restore confidence by ending the current vicious circle of forced sales, falling prices and weakening balance sheets.
The conversations, part of a broader exchange as to possible future steps in battling financial turmoil, are at an early stage. However, the fact that such a move is being discussed at all indicates the depth of concern that exists over the health of the banking system.
It shows how far the policy debate has shifted in recent weeks as the crisis has spread to prime mortgage assets in the US and engulfed Bear Stearns, the investment bank.
The Bank of England appears most enthusiastic to explore the idea. The Federal Reserve is open in principle to the possibility that intervention in the MBS market might be justified in certain scenarios, but only as a last resort. The European Central Bank appears least enthusiastic.
Any move to buy mortgage-backed securities would require government involvement because taxpayers would be assuming credit risk. There is no indication as yet that the US administration would favour such moves. In the eurozone it would require agreement from 15 separate governments.
UPDATE: Fed Denies It
That is so typical of big business. All profits are privately owned but losses are socialized so the good o taxpayer ends up picking up the tab instead of the people who should be taking the loss the greedy fools who made those crummy investments. You want to make huge profits then you should be prepared for also huge losses. Great gain doesn’t come without great risk and I don’t see why honest hardworking people should have to pay for some greedy fool’s investment losses. You bail out people like that and they will do it all over again never learning from their mistakes. There is nobody to bail out the little guy when he screws up so I don’t see why the rich should be held to any different standards than the rest of us.