Good sources of commentary on this are on blogs by Krugman, DeLong, and James Hamilton ('Econobrowser').
Ian Rogers wrote:
> I wonder if this, properly defined, is the 'Minsky moment'?
>
> The potent paragraph from the Fed's statement is, to my mind, this one:
>
> The Federal Reserve Board voted unanimously to authorize the Federal
> Reserve Bank of New York to create a lending facility to improve the
> ability of primary dealers to provide financing to participants in
> securitization markets. This facility will be available for business
> on Monday, March 17. It will be in place for at least six months and
> may be extended as conditions warrant. Credit extended to primary
> dealers under this facility may be collateralized by a broad range of
> investment-grade debt securities. The interest rate charged on such
> credit will be the same as the primary credit rate, or discount rate,
> at the Federal Reserve Bank of New York.
>
>
>
> I'll have to get up to speed on the pricing in secondary markets of
> "investment grade" debt securities in the US but spreads on BBB
> securities are no doubt massive. I assume by investment grade the Fed
> means they will accept BBB securities, as they don't bother to define
> it any further.
>
> And I am assuming this is an open-ended invitation from for the Fed
> to investment banks to restate the securitization machine, and that
> they will buy all and any piece of asset-backed security the market
> can now dish up.
>
> I suppose I am angling for more references to commentary on this
> aspect of the Fed's package of decisions this week. Plainly the
> failure of Bear Stearns, something the Fed would have known about the
> week before last, has got things moving.
>
> And a gentle reminder: I make a living writing on banking for an
> Australian audience, and the chances are responses here will help
> inform my thinking on these topics.
>
>
>
> Ian Rogers
>
>
>
>
>
>
> ___________________________________
> http://mailman.lbo-talk.org/mailman/listinfo/lbo-talk
>