Can $800 billion get us out of the DEPRRESSION?

GET THE FACTS BEHIND THE NEWS PART 4

Financial plans to get us out of a “depression” are coming fast and furious. Secretary of the Treasury Paulson with the help of the Federal Reserve Bank has announced an $800 billion fiscal stimulus. This stimulus is different than previous financial helps.

Since the financial crisis began last summer, both the Fed and the Treasury had focused almost exclusively on patching up the financial system — propping up banks, Wall Street firms, money market funds and issuers of commercial debt.

This financial imitative gets closer to the consumer possibly to answer those who believe help should be for main street, where the problems begin and not wall street where main street problems can end up.

This Paulson plan has twor parts. (A)To lower interest rates on loans for home buyers the gov’t announced it will buy up to $100 billion in mortgages held by Freddie Mac and Fannie May. It will buy up to $500 billion of mortgages securities held by the two housing giants plus Ginnie May.

What this means for home owners and the housing markets is uncertain. This may reduce interest rates but not slow the growing rate of foreclosures accordng to the economic experts.

At the same time the gov’t, announced through the TALF (Term Asset Backed Securities Loan Facility) a $200 billion program. This program will loan money at attractive ratea to private investors who buy securities backed by auto and student loans, credit cards and small business loans guaranteed by the Small Business Administration. The plan will also guarantee the loans if underlying securities default.

The prograqm should lower rates for auto loans for those with confidence to buy an auto Good credit card risks have not been effected. Poor credit card risks have been cut back. The effect this program will have on increasing credit to poor credit risks is unknown. Student loans are another area where the effect of the program is unknown due to conflicting opinions. More on the latest developments.
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