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No doubt current international fiscal plans can restore some measure of growth and employment.

They may even be sufficient to stabilize the eurozone via exports (if the eurozone can make it from here to there).

Not so clear is whether fuel consumption will be cut sufficiently to avoid a resumption of continuous price hikes and declining real terms of trade:

Obama set to push ‘big bang’ reform package

By Edward Luce

US President-elect Barack Obama intends to push a comprehensive programme of social and economic reform beyond an immediate emergency stimulus package, Rahm Emanuel, the next White House chief of staff, indicated on Sunday.

Mr Emanuel brushed aside concerns that an Obama administration would risk taking on too much when it takes office in January. He said Mr Obama saw the financial meltdown as an historic opportunity to deliver the large-scale investments that Democrats had promised for years.

Tackling the meltdown would not entail delays in plans for far-reaching energy, healthcare and education reforms when all three were also in crisis, he said. “These are crises you can no longer afford to postpone [addressing].”


10 Responses

  1. A totally irresponsible article on Bloomberg.com today could have bad repercussions. The authors claim the Fed is hiding behind a veil of secrecy with regard to the credit it is extending to banks. The assertion is that no one knows what collateral is being pledged. I contacted the Bloomberg journalists to explain that it is all bank regulated collateral detailed at the Fed’s Discount Window website–all publicly available information. Moreover, I pointed out that under Section 13 Paragraph 3 of the Federal Reserve Act, the Fed can lend to anyone it wishes on whatever collateral it deems “sufficient.”

    The Bloomberg story has now been picked up by Drudge. This could cause Congressional inquiries and ultimately hamper the Fed’s ability to help the financial markets.

    I put the following letter up on my blog. Please cut and paste it and send it to the journalists whose email address is listed. We must fight against this type of irresponsibility.

    -Mike Norman

    Please cut and paste the following letter and send it to the following Bloomberg journalists:


    It is clearly stated under Section 13 Paragraph 3 of the Federal Reserve Act that in exigent and unusual circumstances the Fed is allowed to lend to whomever it pleases against any collateral that it deems satisfactory.


    Moreover, all banks come under regulatory scrutiny by the Fed and Office of the Controller of the Currency and can only have bank-regulated collateral. The list can be found at the Fed’s Discount Window of Marginable Collateral.


    The Fed is not limiting transparency in its actions. All this information is publicly available. Your research and assertions are incorrect and misleading and you should publish a retraction with the proper information.

  2. Not to mention that the Fed asking for collateral from US member banks is ‘redundant’ in that FDIC/OCC regulation/supervision already requires all bank collateral be ‘bank legal’ and that required capital be sustained.

  3. Exactly.

    Here is the email I got from Bob Pittman, lame brain journalist.

    “I’m familiar with the spreadsheet you linked to. It provides no specifics of what the Fed actually holds. I disagree that Fed lending and collateral ought to be kept a secret. When $2 trillion goes out the door, I think we deserve to know to whom and in exchange for what.”

    Again, he says it’s a “secret” even though he admits that he knows of the Discount Window list of approved collateral.

  4. Hey, Warren, I did! Here was my reply to this idiot, Ivry.

    Again, it’s not a secret. Under the current regulatory structure, banks can only have certain types of assets on their books and those are listed under the Discount Window list of marginable collateral. In other words, anything on that list can be pledged to the Fed for a loan. Until recently, the Fed has actually been tight, requiring Treasuries, but it has moved to accept more of the regulated collateral on that list, which is how it should be.

    Your article injects needless concern over what the Fed is doing and could result in actions that hamper their ability to aid the financial markets.

    If you want to do some good why don’t you write an article and show that list of collateral and explain the current regulatory structure.

    Even better, why don’t you talk about the $600 billion in dollar loans that the Fed has given to foreign central banks to be used as loans for banks and other institutions in those respective countries? Those are uncollateralized and non-recourse. Ultimately, there is no U.S. oversight on those loans. It potentially puts the U.S. taxpayer on the hook. It has been totally secretive and it has caused the dollar to weaken, which is an indirect tax on U.S. households in that it reduces purchasing power.

    -Mike Norman

  5. When warren started expressing outrage over this, I sent a link to one of the Bloomberg articles last week to the drudge report. Isn’t this what you guys wanted?

  6. Mike says: “It has been totally secretive and it has caused the dollar to weaken, which is an indirect tax on U.S. households in that it reduces purchasing power.”

    What is your angle mike norman – someone is lying somewhere right?? 😉

    Naked Captialism blog is ripping them a new one with that bloomberg story. Mr. Bloomberg better be careful, Spitzer tried to ruffle some feathers and look what they did to that guy – how covenient – no more hookers for him 🙁 Imagine the frustration he feels every night not getting his sex fix!! That is why I say hookers for everyone, then when it is socially acceptable no silly tricks can be played. Hell I liked spitzer better when I found out he was seeing hookers – their attempts at turning me against him backfired. I was only upset with the price he paid 😉

    I know there are lots of secrets going on all around somewhere and I don’t like it one bit, wether it is fed collateral secrets or currency swap secrets. I know when GS was a private company risk mattered and ever since they IPO’ed that junk off to me and the rest of the dumb joe 6 packs I have seen my 220 GS investnment go down to 70 dollars today. At this rate how can I afford a new mosler supercat yacht and mt900 supercar? Warren will you give me some free money so I can buy your yacht and your car?

  7. EU Council refuses to release secret Anti-Counterfeiting Trade Agreement documents, stating that disclosure of this information could impede the proper conduct of the negotiations, would weaken the position of the EU in these negotiations, and might affect relations with the third parties concerned. The Foundation for a Free Information Infrastructure requested these documents last week. FFII’s response questions ACTA’s secrecy saying: ‘The argument that public transparency regarding ‘trade negotiations’ can be ignored if it would weaken the EU’s negotiation position is particularly painful. At which point exactly do negotiations over trade issues become more important than democratic law making? At 200 million euro? At 500 million euro? At 1 billion euro? What is the price of our democracy?'”


    Holy Smokes Mike Norman – why so many secrets – isn’t the 7 billion borg tuff enuff to handle the truth?

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