Bail outs already for Wall Street; Main Street . . . [crickets]

Yesterday, March 12th, the New York Federal Reserve decided to pump $1.5 trillion into short-term markets to keep money flowing to banks and big businesses. A twitter post put this amount into instant perspective:

Student debt: $1.5 trillion

So, we are repeating the story from the last recession: bailouts for Wall Street but hand-wringing and caution about helping out Main Street.

Surprisingly, this cash infusion did little to address these problems and led to an additional sell off. Jake explains:

So the Fed is lending this absurd amount of money because banks and corporations had put on too much debt. Now these companies can’t pay off what they owe with the economy and stock market tanking, and revenues going down the drain. Which puts us right back in 2008, except the job losses will be following the crash instead of leading up to it.

* * *

Why did the DOW fall back and end up at the largest % drop since Black Monday in 1987, and 4th largest ever? Likely because the Fed’s statement gave the same message that its surprise rate cut did last week — telling the public (and especially Wall Streeters), “THIS ECONOMY IS SCREWED MORE THAN YOU KNOW.”

A column in the NYTimes agrees, explaining how much conventional wisdom is now being called into question. One thing not mentioned in this column which should give us all additional caution: corporations and the super-wealthy have been sitting on massive cash reserves over the last decade even as debt for the rest of us has been climbing.

Until we start providing some actual assistance for families and workers on Main Street, this “crisis” will continue.

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