Ridiculously low gas prices, inexpensive food, cheap flights, time to waste (watching sports, for example) are going the way of the 5 1/4 inch floppy.
The Fed took extraordinary steps today..
******Fed Takes Steps Under Bailout Bill
WASHINGTON — The Federal Reserve said Monday that it would begin paying interest on commercial banks’ reserves and would expand its loan program to squeezed banks by billions of dollars, fresh steps to help ease a painful credit crisis. ......The Fed also said that 28-day and 84-day cash loans being made available to banks would be increased to $150 billion apiece, effective Monday. Those increases will eventually bring the amounts outstanding under the program to $600 billion.Loans that will be made available in November to banks also will be increased to $150 billion each. That makes a total of $900 billion in credit potentially outstanding over year’s end, the Fed said.*****
In addition the Fed added the following: "In addition, the Federal Reserve and the Treasury Department are consulting with market participants on ways to provide additional support for term unsecured funding markets..... Federal Reserve stands ready to take additional measures as necessary to foster liquid money market conditions."
In addition Bloomberg reports that "Massachusetts approached the U.S. Treasury about possible financing if it can't raise the money from private investors. California, seeking to borrow $7 billion next week, also has communicated with federal authorities, with officials saying they may run out of cash by month-end without the funding."
This means that the Fed and the Treasury are going to guarantee 'commercial unsecured paper.'
This should scare the bejeezus of everyone- taxpayers saddled with unsecured paper. But then again it is all PAPER stuff...
While the CNBC folks and the Paulson/Ben gang are focused on pumping more and more money into the 'system' the reality is being captured in other headlines...
- 'Unbundling' of airline fees gaining speed in U.S.
American Airlines plans next year to adopt the a la carte pricing strategy of Air Canada. This move, along with capacity cuts, ensures that prices for flights will go up dramatically over the next few years.
Full of Doubts, U.S. Shoppers Cut Spending
Kraft to cut 400 jobs, most at division HQs...
Summary: eBay plans to slash work force by 1,600 jobs, its largest cut ever
These are the types of jobs that pay good salaries and benefits, and are hard to replace..
The citizens have to face up to the reality that their standard of living will become significantly lower. The competitiveness for jobs will be much higher. Students, parents, and educators have to recognize this. The days of even a 'F' student from the U.S. having a better life than an 'A' student in Shanghai are going the way of WordStar and VMS.
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