Bernanke Will Hand Out $225 Billion In June
Elaine Meinel Supkis

Unbelievable numbers today! Even as the media and the central governments of the G7 nations struggle to pretend the banking crisis has been contained and all is well, out comes the news that the Fed's new, fancy window for handing out massive loans to banks in exchange for crummy, worthless CDOs! A whopping $225 billion worth! WOW. And the debt markets are still flashing red in the US and now, in Europe. The housing collapse has crossed the Atlantic. And now the bankers are launching a NEW risk-remover: a central clearing house for derivatives? HAHAHA. They think this will be the way to deal with the $500+ trillion Beast? I doubt this. Very much.

Fed to make fresh batch of bank loans

The Federal Reserve announced Thursday that it will make a fresh batch of short-term cash loans available to squeezed banks as part of an ongoing effort to ease stressed credit markets. Swap spreads are spreading wider and wider. Even as faith in the Libor rates collapse.

The Fed said it will conduct three auctions in June, with each one making $75 billion available in short-term cash loans. Banks can bid for a slice of the available funds. It would mark the latest round in a program that the Fed launched in December to help banks overcome credit problems so they will keep lending to customers.

The new round of auctions will be conducted on June 2, June 16 and June 30.

Also Thursday, the Fed -- in a separate program -- auctioned $16.4 billion in safe Treasury securities to investment firms, another effort aimed at easing credit problems. That operation drew bids less than the $25 billion being made available, which could be viewed as a sign of some improvement in credit conditions.

Let's get this straight: the Fed is feeding MORE MONEY in the form of taxpayer-backed Treasury securities...to INVESTMENT FIRMS? The same guys who have just bid up most world commodities to the heavens? And a sign that things are improving is, it was 'only' $16 billion? This news is right on the heels of announcing yet another rescue operation to keep our bankrupt banks running?

EACH of these auctions coming out of the brand new 'windows' poked into the Fed bank vault's walls is 'only' $75 BILLION @? This happens to be another $225 billion! Way back last summer, I predicted the amounts ladled out would be over a trillion and I was right, as usual. This $225 billion will be ladled out over the course of one month! Let's do some calculating: if this is done at this rate over the course of a year, it comes to $2.7 TRILLION.

It looks pretty obvious to me that the banking crisis, far from being over, is actually getting worse. Indeed, the housing markets which supposedly is the cause of this collapse is not doing well at all, is it? The rate of repos isn't climbing sky high only because the courts are utterly swamped with repo cases! So it is like a snake that ate a cow. Eventually the cow will be digested but the snake is still trying to swallow it. Far from being over, this process has barely begun.