There may have been a time when the Fed knew.. BUT.. Not any longer. The financial system is become so vast and secretive that The Fed, the treasury dept and the SEC only have a glimpse. Consider Citi-bank. It has taken the govt several months to realize how interconnected world financial insitutions have become. Citi-bank has branches in every nation. It may be the largest money laundering operation in the world thru the use of their " private banking" operations. The gov't now admits they have no accurate estimate of how much it will cost to bail out Citi-bank. They have already "loaned" Cit-bank some 40 bil in cash and assumed some 300 bil in debt instruments. However, Citi-bank is exposed to some 3-4 trillion in off books debt. The word derivative does not encompass the entire scope of what Cit-bank was up to. They may be exposed to much more that 4 trillion.. nobody knows.. not even Citi-bank. How was this allowed to happen?/ Nobody knows because the govt was oblivious to reality.
The astute financial professional.. in it for the long pull.. will explain it like so... "we consider the 20th of January 2009 a pivitol time". The moves we make during this interval will determine our survival... the problem is we do not know what moves to make because trust has vanished from the industry and the government has demonstrated it has no solution evidenced by it actions to date.
The problem is the only nation able to do something ( the USA) is broke along with all but 11 states in the nation. Dealing with a debt problem in excess of 20 trillion wordwide far exceeds our ability.W already face unfunded mandates in health care, retirement obligations etc in excess of 70 trillion in the USA alone. Stating the Fed has no idea whats going on also means they have no ides how to solve the mess. B.O.'s solution is to spend our way out of then mess.... but this was how the mess was created.
Richard Robin wrote, In reply to R C Macaulay's message of Fri, 28 Nov 2008 19:22:31 -0600: Hi, [snip]
The Fed is not in the habit of giving away info.. why/ .. first, because they have no idea whats going on, Richard
[snip] ...the more likely reason IMO, is because they know exactly what's going on. Regards,
