$1.25 Trillion out the Fed door

Bsetser

Brad Setser. Economist.

From Brad Setser’s blog I get the scoop that, at least, –there could be an extra $520 billion in swaps–, already, $1.25 Trillion USD have been pumped out from the Fed’s balance sheet to put back some liquidity to the banking system –or to cope with the silent worldwide run of the banks.

The stock market continues to bleed away and high short term rates persist in their seizure mode.

From this

The Standard & Poor’s 500 Index fell 46.78, or 4 percent, to
1,114.28. The Dow Jones Industrial Average declined 348.22, or
3.2 percent, to 10,482.85. The Nasdaq Composite Index slipped 4.5
percent to 1,976.72. Almost 14 stocks retreated for each that
rose on the New York Stock Exchange.    

The S&P 500 has slumped 24 percent this year as the subprime
mortgage crisis brought down banks including Lehman Brothers
Holdings Inc. and made borrowing more expensive. The index lost
8.1 percent over the past four days and is poised for its worst
weekly retreat since the markets reopened after the Sept. 11,
2001, terrorist attacks.    

      

and  this Bloomberg bailout concerns articles:

The two-year swap spread climbed to as high as 167.25 basis
points from 156.25 yesterday. It had widened to 166.38 basis
points on Sept. 24, the most since Bloomberg began compiling the
data in 1988. A basis point is 0.01 percentage point. The swap
spread, which is a gauge of credit concerns and partially driven
by expectations for the London interbank offered rate, or Libor,
is the premium charged over Treasury yields to exchange floating
for fixed-rate payments.    

I gather the market is pessimistic about the 12 votes needed to pass the bailout.