DC's Solution to a Credit Crisis...More Credit of Course!

From Yahoo Finance.....

WASHINGTON (AP) -- With banks limiting the availability of auto, student and other consumer loans, the Federal Reserve said Monday it would extend a program intended to help spur more lending at low rates

The program is set up to provide up to $1 trillion in low-cost financing to investors to buy securities backed by consumer and commercial loans. But private economists said the program, Term Asset-Backed Securities Loan Facility, or TALF, has so far provided little benefit for consumers and businesses still struggling to get credit.

http://finance.yahoo.com/news/With-credit-tight-Fed-extends-apf-3707488235.html?x=0


To review, the crisis we are currently in is because the Fed wanting to forgo a "healthy" recession after the 9/11 attacks held interest rates artificially low. This led to the housing bubble and accompanying stock market bubble. Consumer spending went through the roof and debt piled up like cordwood. When it became apparent to all involved that this was unsustainable growth the housing bubble popped and the credit markets seized. Though the economy is bad, consumers are "de-leveraging" which just means they are paying down debt from the halcyon days. This is actually a healthy thing. Unhealthy or otherwise the Federal Government needs to see growth other politicians will be thrown out of their jobs and they most certainly don't want that.

The risk here is that in order to get out of the hole we are in we are going to have to blow a bigger bubble and when that pops.....