March 18, 2009
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News: TALF is Born/Bourne.
Still in infancy after being launched yesterday, could this toddler, ultimately, resurrect a Trillion-Dollar giant? Even the negative Economists aren't saying "NO". (They're not saying "Yes", either but what do you expect? They've been wrong on every turn for the last 8 years. This isn't a reflection on the thousands of good economists, however. It's just a reflection on the few loud ones who have led us into this mess in the first place.) Any honest economist will tell you that we need business liquidity to build and consumer liquidity to buy, for the economy to get going again. Since the ‘super rich' have hoarded 99% of our nation's income, consumer liquidity (99% of us having to all split up the only 1% of income remaining) became anemic, consumer spending slammed to a halt (of course). Forced to live on credit cards without the means to keep payments up, credit card securitization investors were the next ones slammed. Almost overnight, the Trillion Dollar securitization industry imploded down to only $3 Billion (that's like 3 cents on $10). This market just happened to be the main supporting beam of the credit card industry (among many others), so guess what?
Not well understood by the industries and not well-regulated by the Fed (as we know), this Trillion Dollar Behemoth derivative industry all but vanished. Simply pouring billions of dollars into the credit card industry was not enough to rescue the lenders. It had grown beyond just lending money in order to sustain it's size. It needed raw materials (consumers and money) to manufacture credit card loans and sell them to investors.
So, even if we could supply credit card lenders with these raw materials, they still wouldn't have any buyers. The trillion-dollar securitization market is all-but dried up. We need to bring the barren (baron) desert back to life. So, little by little, we'll nurture it. This is the greatest value of TALF (Term Asset-Backed Securities Loan Facility). Already, things are looking up on Wall Street. Still, there are the naysayers and loser economist (those few who lied to us). But the poisoned ground is being cured little by little so a more safe and regulated Securitization Market can grow. Then, ‘builders' can once again build and ‘buyers' can once again buy and everybody's happy (except the naysayers, of course).