Federal Depress

Like an addict getting its fix, the Federal Reserve has decided to extend its liquidity facilities and foreign exchange swaps by another six months. Whilst I don't have an issue with the FX swap lines, the "liquidity facilities" include a morass of relief packages to impaired entities (including Wall Street).

Given all the news flow, a more measured approach would be to extend the FX swap lines, and start reeling in some of that precious liquidity propping up the commercial bank's toxic loan books. We all know those loans are worth a few cents on the dollar - having the Fed prop up valuations is of no help to anyone at this point.