Dead cat bounce or something else?

posted by The Vidiot @ 4:39 PM Permalink

News that the Fed will be setting up a fund similar to the fund set up during the S&L crisis sent Wall Street soaring this afternoon.

Here's how it works: this 'fund' will buy up bad debts from the various financial institutions, thereby freeing up money that the banks can then work with.

While it may sound like a good idea, here's what's actually happening: The Fed will print up a bunch of money, hand it to the American government's new 'fund' that then hands it to the banks in exchange for bad paper. Now remember, that paper is bad for a reason. When all that paper defaults, the Fed will still want it's money back. They're merely loaning it to the American government. So, guess who is going to get stuck with the bill?

It's JUST like the S&L bailout that stuck the taxpayer with a $160 billion tab. Only this time, we're going to get stuck for A LOT MORE.

Rapacious greed wins again.

Labels: capitalism, Economy, wall street