New TALF program starts in June

The Federal Reserve just keeps getting in deeper and deeper to bail out their Wall Street bankster buddies.

The Federal Reserve announced Friday that it will launch a much-awaited program in June to bolster commercial real-estate lending.

And, to help make the program more attractive to investors, the Fed will provide longer, five-year loans.

Investors would use the money to buy securities backed by commercial real-estate loans.
"There's a looming crisis in commercial real estate whereby owners of shopping malls, hotels, rental properties and many other types of buildings are unable to refinance or to pay for new construction," Fed Chairman Ben Bernanke warned lawmakers on Capitol Hill in March.

The market for so-called commercial mortgage-backed securities, or CMBS, came to a "standstill in mid-2008," the Fed said Friday in announcing the launch of the new piece of the TALF program. The CMBS market accounted for almost half of new commercial mortgage originations in 2007, the Fed said.

This looks like another attempt to bail out the Wall Street speculators at the expense of the taxpayers.

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anything but the real economy

Beyond propping up an industry which clearly needs to shrink, anyone else noticing a pattern?

If a company actually makes something, i.e. manufacturing, they get pretty much nothing. This includes the auto industry whose "bail out" amounted to peanuts in comparison to the financial sector.

But when a hard wind blows on anything to do with banking, such as commercial real estate, oh my, the Federal Reserve and Treasury just jumps to the rescue.

This is ridiculous. How many boom and bust cycles have their been in residential and commercial real estate, especially commercial. I know there was a major one about 1987 time frame and as I recall this was part of the savings and loan crisis, commercial real estate, especially office space was way over built.

I mean good God, they talk about efficiencies in the auto industry and all of this, but when it comes to things like commercial real estate, it all clearly being a bubble that was going to pop....oops, cannot let that happen.

Also talk about going against market principles and efficiencies.

But, manufacturing at deaths door, can't get a damn dime here.

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"...from the point of view

"...from the point of view of the empirical record, and the rival theory of endogenous money, this will fail on at least four fronts:

1. Banks won’t create more credit money as a result of the injections of Base Money. Instead, inactive reserves will rise;

2. Creating more credit money requires a matching increase in debt—even if the money multiplier model were correct, what would the odds be of the private sector taking on an additional US$7 trillion in debt in addition to the current US$42 trillion it already owes?;

3. Deflation will continue because the motive force behind it will still be there—distress selling by retailers and wholesalers who are desperately trying to avoid going bankrupt; and

4. The macroeconomic process of deleveraging will reduce real demand no matter what is done, as Microsoft CEO Steve Ballmer recently noted: 'We’re certainly in the midst of a once-in-a-lifetime set of economic conditions. The perspective I would bring is not one of recession. Rather, the economy is resetting to lower level of business and consumer spending based largely on the reduced leverage in economy'".
--Steve Keen

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