Link: Fed makes billions available to battle crisis - Yahoo! News.
Credit is the economy's lifeblood. The global credit clog — which started a year ago and grew much more severe in the past few weeks — has made it increasingly difficult for people and businesses to borrow money. The crisis — if it persists — could plunge the economy into a recession, President Bush and Fed Chairman Ben Bernanke have warned.
Another way to make the same point: the economy is based on debt. It produces debt. We are now in a crisis of overproduction.
(Also, note: the threat is recession; we've been hearing about being in or on the verge of recession for nearly a year; and, they don't say that this could prevent recession--and most economics think it can't.)
Lets be clear. The credit markets are on strike. They will not function as expected until they get what they want.
If labor does this - its the end of the world as we know it - when capital does it - open up the checkbook.
Posted by: pebird | September 30, 2008 at 07:59 AM
Perfectly put pebird.
Posted by: old | September 30, 2008 at 08:26 AM
Trying to explain this to a friend, a 20-something college student, specifically that the answer to our debt-based economy is not and never has been (debt-based) consumption. I was met with one of the saddest and most terrifying things personally communicated to me with some larger significance:
"It makes me mad that I can't just buy things when I want them. It makes me feel helpless. I suppose a lot of others probably feel the same way. Not really sure how to solve that sort of thing though. Its seems to be an ingrained way of thinking at this point."
I could chalk it up as a foible of youth, but I think she's right when she says others probably feel like her too.
Posted by: Joe Clement | September 30, 2008 at 04:23 PM