Will The $800 Billion Work?

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Get the money out and get it out fast. If the Fed’s new facility can push $800 billion into part of the economy which supports consumer lending, the ability for people to buy homes, cars, and charge on their credit cards will improve. Even if they cannot afford to repay any of it.

Some analysts don’t think the program will work. It will be another chance for financial firms to take federal money and sock it away to bolster their capital positions.

According to Bloomberg, “We are sort of spitting in the wind,” said Michael Darda, chief economist at MKM Partners LP in Greenwich, Connecticut. “Banks won’t be throwing a lot of loans out there when they fear — rationally — those loans may not be paid back.”

Maybe Darda was turned down for a car loan.

Douglas A. McIntyre