They sound all satisfied with their bailout deal, but is the credit market going to be happy?

The American people sure aren't.

I might have read this process wrong, but I thought they were acting to shore up 'confidence' in the credit market so that investors and lenders would feel comfortable enough to free up credit and continue to make loans. If I'm right in that, we will need to wait and see how that market and others react before declaring anything a success.

Are folks just waiting for the stock market to stabilize? That doesn't seem to be the point of the exercise.

You're correct, it's the credit market that counts. All this talk about passing it before the Asian stock markets open is pure bull - panic, panic, panic - rush!!

It's hard to see the market all of the sudden becoming comfortable enough to start lending money again.

without question. I would guess about 3%.

What about the lenders? Will they see this as something that helps them? Is it enough . . . will it have enough of an effect to stabilize the lending market?

It relieves all the most immediate concern about a bank panic and the most vulnerable financials going under. Last week, hourly indices reflected the latest news on the possibility of a bailout.

with no accountability at all.

Whether that will help Democrats or not remains to be seen. I don't think it will help us, but we'll see.

Credit has declined almost 7% from earlier this year


Earlier this year, credit extended by banks to companies and consumers was still growing at double-digit rates compared with three months earlier, according to an analysis of Federal Reserve data by Goldman Sachs. By mid-June, bank credit was declining at an annualized pace of more than 6 percent.

That is a drop of nearly $150 billion, an amount much larger than the value of the tax rebates the government has sent to households this year in an effort to spur economic activity.


. . . if the newfound caution of American banks is prudent in the long run, the immediate impact is amplifying the troubles with the economy. The Federal Reserve has been lowering interest rates aggressively to make money flow more loosely and to spur economic activity.

The financial system is not going along: As banks hold on to their dollars, mortgage rates are climbing. So are borrowing costs for corporations.

Some suggest that the banks, spooked by enormous losses, have replaced a disastrously indiscriminate willingness to hand out money with an equally arbitrary aversion to lend — even on industries that continue to grow.

“There’s been a lot of disruption in the credit market, and a lot of traditional lenders have really tightened up,” said Gregory Goldstein, president of Macquarie Equipment Finance, which leases computer gear and other technology to companies. “Before, some of the standards they lent on were weak, but we think they have overshot and gone too far on the other end.”

http://www.nytimes.com/2008/07/28/business/economy/28credit.html

It's like having a drought. One rainfall will not overcome the effects. This is a much bigger problem than 700 billion dollars.

I suspect this infusion will help the markets hobble out of the year, but next year looks grim. Bush will have managed to push all his problems into 2009, and Obama will inherit them all.