America’s Central Bank, the Federal Reserve has plugged another costly line of life-support into the ailing US economy. It is a two-part treatment, designed to alleviate the headache of getting a mortgage and to unblock the congested passages of consumer credit, to get Americans spending again. It is an unorthodox prescription, involving a double injection of more than 600-billion euros.
Treasury Secretary Henry Paulson said: “Millions of Americans cannot find affordable financing for their basic credit needs. And credit card rates are climbing, making it more expensive for families to finance everyday purchases. This lack of affordable consumer credit undermines consumer spending and as a result weakens our economy.”
The Fed is to spend up to 460-billion euros buying mortgage-related debt trying to get money in the housing market flowing again, after it dried up with the meltdown of American high-risk mortgages last year.
There is a further 150-billion euros to support consumer credit like car-loans and credit-cards. In 2007, they accounted for business worth 184-billion euros. This October they had all but ground to a halt.