Re: [Marxism] Lenin's Tomb on the Stockmarket

[Marvin Gandall <marvgandall@xxxxxxxxxxxx>]

Tom O'Lincoln wrote:

> My feeling is that this financial crisis will pass...
==============================
Probably, unless the housing downturn really slows the real economy and you
begin to get an wave of foreclosures, business and personal bankruptcies,
and steadily rising unemployment which spreads from the US to the global
economy. That's like trying to predict next year's weather.

Most likely, the Federal Reserve will try to clear the seized up financial
markets by taking a lot of the mortgage- and other asset-backed paper which
the hedge funds and banks can't sell to private investors as collateral for
cheap loans to the banks. It's already been doing this indirectly through
open market operations for the past few weeks, and by lowering the discount
rate on Friday, it can now provide these cash infusions directly with less
effect on wider capital markets. The banks have a lot of this illiquid
stuff - both on their own and customers' accounts - sitting on their books
which they'd like to get rid of, and so they'll dump it on the Fed in
exchange for the Fed's loans which they'll pass on (at higher rates) to the
threatened mortgage brokers, lenders, and investment funds in their debt.


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