Rescue plan for the US economy? You must be kidding!

'Less than one week after the taxpayers rescued AIG (with USD85bn), company executives could be found wining and dining (costing USD0.4mn) at one of the most exclusive resorts in the nation,' US Congressman Henry Waxman told the House Committee on Oversight and Government Reform.

Beside the USD85bn, USD0.7trn has been designated to buy up houses from the banks at above market prices so as to stabilise the property market. Soros wisely pointed out that the banks will be glad to load off all the worst of the worst housing loans to the FED and keeping the good quality housing loans in their own books. These worst of worst housing loans will not see the light of the day. It is as good as accepting full losses on the FED's books.

Before FED is able to get on with their housing 'rescue' plan, large US companies are in such desperate conditions, that AAA company, GE has to resort to borrow at 10% from Buffet (and additional sweeties thrown in) when normally GE would pay 5% for their working capital from any banks that would usually queuing to lend GE. GM just shut down their whole Europe production because they have run out of cash. FED has to quickly fight the engulfing fire of corporate credit seizure by doing what the banks suppose to do (never before, done by the central bank, FED), provide working capital to normal companies. In short, FED is now behaving like the only bank in USA, as all the US commercial banks try to horde their cash for rainy days (bank run). It is beyond FED to know the quality from the dubious companies in lending money to them, yet FED is now the only standing hero.

As they used to say 'hero dies young' but in the case of FED, he may die cock standing. That is to say, even FED is dead, she still need to give the impression that she is still alive and full of vigor. To do that, she probably already order lots of printing machines for the humongous tasks ahead. Of course, this is a modern world, FED just has to key in additional zeros to the banks' asset values, which is being done now and more zeros as the days go by.