Fed Losing Influence

One thing to note that is being downplayed by the MSM is that the Treasury had to go to the market for more money to initiate some of its programs. The US FED is raising NEW MONEY to pay for these bailouts. In the past the FED was able to use its existing balance sheet to bailout financial institutions or influence the mkts. More fund raising required.

An early morning Saturday note is the Pres. Bush has just requested Congress to raise the National Debt limit to 11.3 trillion from 10.6 trillion. This is after Paulsen and Bernanke had the debt limit raised form 9.8 trillion to 10.6 trillion for their rescue plan for Frediie and Fannie (also AIG). The ink is not even dry on the proposals and the price tag is rising (just like oilsands projects). In the last 2 months, the National debt limit has been raised from 9.8 T to 11.3 T or 15% (1.5 T total). If it was not so sad, it would be funny. To put it into context, each and every US citizen has just gone $5,000 deeper into debt.