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Money, money everywhere …except in your pocket?

December 16, 2008

There’s lots of money sloshing around the financial system these days. The Federal Reserve has established a target range of 0-0.25 percent for its key rate, bringing it closer to unconventional action to lift the economy out of a year-long recession.

From Washington, the first package aimed at rescuing the credit crisis-hit banking sector amounted to $700 billion. Treasury can use only half of that amount and it has already pledged all but $15 billion of it. The Senate has refused to pass a $14 billion rescue package for Detroit’s three major car companies last week, leaving it in the hands of the Bush administration to work out a deal.

So far, the names that are on the receiving end of all the cash — AIG, JPMorgan, Citigroup, Merrill Lynch and if a deal can be made, General Motors, Ford and Chrysler — are all very big companies.

The Fed’s latest move could help funnel some cash to the ordinary folks at the helm of the economic ship. What do you think, will any of the money flooding the financial system reach smaller companies or other borrowers? If you’re an individual looking for more cash, are you having trouble and do you think help is on the way?

Comments

One banking representative recently said that the cash injections were just “filling in the hole”. If this view is pervasive, and bankers see the money as just a way to recoup, then very little is likely to trickle down.

Posted by jake sorenson | Report as abusive
 

Shouldn’t these companies maybe think about cutting costs to help themsleves a little bit? I started a small business and had 0 in loans. I’m not rich by any means. I started my business with $70, that’s it. I could not get a loan, no way, no how. I guess maybe if I was a large company that was run into the ground by spending large amounts of money on luxury items for “business purposes” and going broke because of it, then the gov. would pay the bills, that’s just not right. I’d say, sell your jets, paycuts for the CEO and the officers, no more company paid “fringe benefits”, and see what else can be cut and force it on them. But that’s just me.

Posted by Christian | Report as abusive
 

The banks are just using the money to cover their losses and not help the economy by making loans. Consumers are too scared to get loans even if they made it available. Why? Employees are concerned about jobs, business owners are concerned about repayment if their business grows even more sour than currently. Their are no positive indictators to encourage expansion of employment or better business prospects.

Before if things were bad in the US, companies could turn to other parts of the world and balance it out and continue growth. This mess has unfortunately consumed the global.

The executives and board of directors need their assets confiscated and liens of repayment on their salaries and that of their family members until full recourse is made of all the capital loss and put them behind bars with no parole and have them pay for their stay in jail along with no perks and amenities should be provided in jail. They would do this to an average joe if they committed a crime, so why shouldn’t the same standards apply here.

Posted by rshah | Report as abusive
 

The textile industry in the south slowly folded with a very large loss of jobs. This has staggered the economy of many southern cities. No bail out was offered. The auto industry is no different than textile industry. Let them reorganize.

Posted by Allen | Report as abusive
 

The federal government is basically creating money out of thin air and giving it away. That will devalue money already in existence (like my retirement savings accounts and pension). Eventually we will have high rates of inflation which, as a retiree, is about the worst thing that can happen. Thanks a lot guys !

Posted by john | Report as abusive
 

what, if anything does this mean for morgage rates??

Posted by Declan | Report as abusive
 

Nothing they do will help unless it leads to job creation. Without jobs for the working class the economy will stagnate. The institutions being helped by the Fed are the very institutions that got us into this mess and they are looking out for their own survival. The entire world is in a recession which means we are in a situation where only the strongest nations will survive. The EU is already falling apart while Communist China has managed their situation by surpressing news of their economic turmoil. The fact that the Fed is giving money away suggest that the situation is more dire than anyone knows. They will not come clean and let the public know the real situation because they do not want to loose control of the situation and allow chaos to reign. As long as the general public thinks the Fed is in control everything will be stable until another shoe dorps. All that we see is the tip of the iceburg but what most people are not aware of is that iceburgs flip. When this economic iceburg flips it will lead to a greater depression than the Great Depression simply because of the populations involved. The Fed’s actions only highlight the magnitude of the problem.

Posted by Emile | Report as abusive
 

If people are over extended and can’t pay back what they currently have borrowed,…..does giving them the ability to borrow MORE make any sense? Eventually the debt has to be repaid,….doesn’t it?

Posted by Craig | Report as abusive
 

“Eventually the debt has to be repaid,….doesn’t it?”
Well … yes. However, if the dollars used to pay it off are worthless that’s the same as not repaying it.
Inflation favors the debtor over the creditor and we’re the biggest debtor nation that has ever existed. How sad that we’ve come to this!

Posted by Bob | Report as abusive
 

This whole situation makes me uneasy. The leaders of nations and their central banks are pretending to the world that they have control over free markets, all the while knowing that they do not. The actions that they take only prove to the market that they have no faith in it, leaving all of us increasingly confused about what they are trying to accomplish.

Posted by Adam | Report as abusive
 

When the unsinkable Titanic running at top speed hit the warned-of iceberg, there was plenty of space in the lifeboats and small loss of life – for 1st class passengers.
Why ?

Posted by Survivor? | Report as abusive
 

The US is certainly in store for some very big changes. One of those is the way its citizens think about the rest of the world.
China is certainly in a ‘slow-down’ but not a ‘melt-down’, and don’t fool yourself that they are suppressing these stories.
The Fed can create the liquidity, but if the banks don’t lend it, you’re in a trap. The policy makers are helping those who helped them in support their power base.
Sooner or later they will begin printing money, and if they print enough of it, sooner or later it will begin circulating. As of now those banks that have been saved are NOT making any loans or creating any jobs. And until they start doing both, the US economy will stay in the tank.
I hate the thought of it, but my country is going down the tubes……so get used to it, cause as Bob Dylan said, “The times they are a changin”….

Posted by Jim | Report as abusive
 

The fed is printing money that is backed by nothing; nothing – read it again; nothing. This means that more of nothing will dilute the buying power of the worthless dollar even more. Read it again. The worthless dollar. The U.S. goverment is to blame for every problem the U.S. is suffering from – forget the terrorists; they are in D.C.; the real ones.

Posted by wally | Report as abusive
 

As the general idea is to pump money out as fast as possible to keep the economy from going asunder, why not install free universal health care throughout the US. Implementing free health care would keep money in EVERY individual’s pocket and not be lost to the corporate abyss. This would be a tremendous boost to the entire health industry and light some dynamite under the upcoming administration to steer the failing health care system in a positive direction.

 

The “government” is a body of people elected by a very stupid, uneducated population. The voting population don’t know anything about politics and rely on sound bites and political advertising to make a decision on who they ‘like” the best. Instead of making it easier to vote, there should be tests required plus proof of citizenship. This country is not going to hell, it’s already there. Socialism is here and the redistribution of wealth is unfolding everywhere. Will the last one to leave to good old U.S. please remember to turn off the lights! Chicago politics, Nancy and Harry will be the comedy act of century. There will be “Change” indeed. and exactly what we seserve

Posted by jerry | Report as abusive
 

@ Jerry
Did you vote? If you did that means one thing, you are also a part of the “uneducated population”. I have one word that sums it all up. Greed. That’s the root cause of all our financial problems and will be the demise of our future. Banks, CEO’s, and the wall street elite can all take a good hard look at their salaries/profit and do what is right to get our country back on track.

Posted by Mike | Report as abusive
 

The point is this: America does not make anything. We flip houses, play the stocks, but do not make anything. We USED to sell software and services, but even these have gone. So what exactly are we selling to the world market? Movies (Good) and bad loans wrapped in fancy packaging. Ha!

With a bucket of KFC, a thirty inch-TV, a car (or two) in the garage and a six-pack in the fridge, who, honestly, really wants change?

Posted by sally | Report as abusive
 

If excessive borrowing and greed got us in this mess, what makes the Fed think that additonal borrowing will get us out? Aren’t we just postponing the inevitable?

Posted by sue | Report as abusive
 

Are you kidding? Credit companies and banks are just using all of this as an excuse to deny or cut off credit to existing customers who’ve had pretty decent payment histories but just aren’t charging enough these days (in their eyes). Phooey. This is all smoke and mirrors for more manipulation.

Posted by notworthit | Report as abusive
 

More and more people are looking around and realizing there isn’t a ‘productivity base’ in the US. Basically, one has a great deal of difficulty finding anything to buy that’s made in the US. ‘American’ carmakers don’t use American-made parts. Even most of our food is coming from elsewhere. It’s more profitable to export what we grow and then import and ‘process.’

Is judging a person’s value to society by what they own, not what they do, worshiping the golden calf? That’s what our children have been taught. It’s why teachers don’t get respect. They don’t make enough money to be ‘important.’

Posted by Sharon | Report as abusive
 

Albert(you know who) said ” Only a fool keeps on doing the same thing and expecting to get different results.”

Posted by Horace Dunnitt | Report as abusive
 

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