I was asked what my thoughts were on this story so I decided to blog on it. First the highlights of the story.
The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral.
The Fed made the loans under terms of 11 programs, eight of them created in the past 15 months, in the midst of the biggest financial crisis since the Great Depression.
``It's your money; it's not the Fed's money,'' said billionaire Ted Forstmann, senior partner of Forstmann Little & Co. in New York. ``Of course there should be transparency.''
First, what a mess. We are in so much trouble. I go from being pessimistic to super pessimistic and today I am in the super pessimistic camp. It stems from talking to a debt investor over the weekend about the massive corporate defaults that are coming then compounded by the AIG news this morning. The AIG "bailout" is a total scam in the sense that it is something new and you start extrapolating to what it means for other financials and we are in major trouble. I haven't been this depressed about the state of our economy since late September.
Anyway back to the article. I can't blame the FED. If I was in the FED's shoes I would be doing the same thing. I am not saying it is right but you can't blame the FED. You have to blame Congress for not requiring such disclosure. If that information is released (I would argue we do have a right to know it) then alot of people will get wiser alot quicker with how bad things are. If your the FED at this point you don't want that. It needs to happen but their are ramifications attached to it so if your the FED you almost have a responsibility to focus on the ramifications. If your Congress or the court systems at this point you have a responsibility for justice and rule of law to prevail. I think everyone is acting correctly in a capitalistic way though I think the end outcome should be disclosure.
Either way know there will be no upside surprises to whatever the FED is holding.