William Polley wonders out loud as well:
The WSJ Real Time Economics Blog opens a post with this:
“Back in 2003, when the Federal Reserve cut interest rates to 1%, the world worried that the Fed was running out of ammunition and would soon have to turn to unconventional tools.
Now, in 2008, it’s worth asking if the Fed could run out of unconventional ammunition. Tuesday’s offer to lend $200 billion of its Treasury holdings to primary dealers in return for mortgage-backed securities both guaranteed by the government-sponsored enterprises (Fannie Mae and Freddie Mac) and not (private-label MBS) means it will have eventually sold or pledged half of its Treasurys, limiting how many more of these tricks it can pull off.”
My first thought when I heard about this innovative move the Fed was that it would take the pressure off for a few days–maybe a week or two. And what then?
And Reader fatbear (any relation, cousin?) sends this link to Bloomberg: Carlyle Capital Fails to Reach Accord; Lenders to Seize Assets.
We also will be seeing municipal problems in Cleveland and Detroit to name a few, although as save the rusbelt points out these cities have been ignored to some degree.