What the Fed did today (thanks to bail-out bill)

First of all, the bail-out bill was NOT trying to stimulate the Stock Market. Everybody's been talking about the DOW, but it's not the focus of the bill. the bill was focusing on deeper problems that affect the DOW, but until these deeper problems (primarily the credit freeze) loosen some, it won't help the DOW.

This 1-page article sums it up pretty well:

The Fed Moves Again — And Here’s What It Means
In its latest attempts to unfreeze credit markets and keep the banking system functions, the Federal Reserve issued a statement announcing it is using its newly granted powers to pay interest on the reserves that banks leave at the Fed, among other things. Here’s what the Fed is doing and why.
http://blogs.wsj.com/economics/2008/10/06/the-fed-moves-again/?mod=googlenews_wsj

Please read it, I think it will clear up many questions and many misconceptions I have seen posted here on DU.

Thanks, all!
:hi:

a 700-pt drop is not exactly a vote of confidence.

credit markets. Until the credit freeze thaws, unemployment will remain high and go even higher. It will take a while for it to affect unemployment and then longer for the market to react.

if you listen to NPR or NPT then you should know that it was a reaction to the European Markets. They need relief similar to what the US passed, but it's more difficult since the European Governments can't agree on a solution. Although some are saying that part of it is because the bail-out was TOO LATE.

As if our legislators should just hand $700,000,000,000.00 over the moment it's asked for, without any deliberation or study of the problem.

The bailout was also billed as imperative to temporarily ameliorate the credit crisis. It DIDN'T, as confirmed by the sudden change in attitude regarding when we'll start to see the effects: "This is going to take time."

Funny how that was never mentioned when Congress was being pressed to pass the damn thing.

in a financial meltdown. Of course the DOW's performance should not be tied directly to the bailout. As was said by an NYSE floor trader on Friday, after the bill passed the House: "The more we looked at it, the more we realized it was not going to solve the problems it was designed to solve. So, the stock market is simply going back to trading the day's fundamentals and news." This comment coming after a rather non-celebratory shrugging of the shoulders by traders following the passage of the bailout bill. Which is exactly what happend today. But, the DOW IS a part of the whole picture. The whole picture is global. And today, the global system is melting down.

I noticed the acceleration section in the first bill when I read it, and it had me mightily confused. I commented on my confusion a couple of times, I think.

I did some research into it and found that the UK and Canada already had been doing this -- or something like it -- for some time and then finally found an explanation on an obscure economist's blog out there in the ether somewhere.

This gives more detail. Much appreciated.