In its latest desperate move to head off the inevitable recession, the Federal Reserve announced Tuesday the creation of another new facility, the Money Market Investor Funding Facility, which will provide up to $540 billion dollars in new funds to back the purchase of short-term debt from money market mutual funds. Much of the debt, all of which will expire in three months or less, will consist of CDs and commercial paper.
In what is unabashedly being called a "partial nationalization" of the U.S. banking industry, the Bush administration announced Tuesday morning that the federal government will be purchasing $250 billion worth of preferred stocks in all of the nation's nine largest banks. Ostensibly to avoid any appearance of bias, healthy and ailing institutions alike are being forced to submit to the program, the first of what will surely be a train of dictatorial moves by Treasury Secretary Henry Paulson, who has been granted unconstitutional plenary authority over the entire financial sector as a result of the recent bailout bill.
Triple-digit losses on the Dow are becoming a commonplace, but there are now ominous signs that the financial crisis of 2008 is entering a new and possibly more devastating phase. Thursday, October 9, saw the Dow plummet another 670 points, well below 9000 to a new five-year low. The latest catalyst for market decline is the likelihood that GM and possibly other automakers may soon be facing bankruptcy.
As the financial crisis continues, the Bush administration, led by Treasury Secretary Henry Paulson, is moving ahead to enact the unconstitutional and socialistic measures contained in the recently passed and misleadingly nicknamed "bailout bill" — misleading not because it's not a bailout, but because it's much more than that.