Undoubtedly by now you’ve heard how the Federal Reserve is going to supply $200 billion worth of Treasuries to the U.S. financial market, with the primary intent of spurring more borrowing activity. The move was designed to stave off continued shortages of cash within the lending market. In other words, it’s an injection of liquidity. In MY words, it’s another ineffective, b***s*** p.r. effort.

It’s amazing how quickly the market has forgotten something I discussed here in the blog (at great length) a mere two months ago….the Fed already tried this exact same thing. They put $40 billion worth of liquidity into the loan market in December. The Fed said it was “a creative way to try to get more cash into the system without marking anyone as being in trouble.” (a ’something for nothing’ mentality that terrifies me, coming from a Fed governer)

Did it work? Looks like it didn’t - things got even worse in January and February. So, the Fed’s multiplying the effort by a factor of five this time around.

Perhaps it’s just me, but maybe a lack of cash or liquidity ain’t the problem. You can throw all the money you want to at the perceived issue, and it won’t solve or fix what’s broken. What’s the problem? Nobody wants to borrow anything right now, whether they’re credit-worthy or not. And, banks could have tons of cash, but that’s not going to make an iota’s worth of difference in who they’re willing to lend to.

And on a side note, does anybody really think this is a consequence-free decision? Somebody will eventually be left holding the bag.

My bottom line is this…the more desperate the Fed acts, the more nervous I get. When they start inventing ways to drum up lending activity, I get downright scared. December’s parallel maneuver was a joke, and I don’t see how magnifying a joke makes things better.

By the way, I recall Alan Greenspan saying once he felt recessions could be completely avoided by careful operation of the Fed’s financial tools. I’ve never heard Bernanke say that, but I have to wonder if he thinks it.

Personally, I don’t feel cyclical recessions can be avoided, and I’m fine with that. What I’m not fine with is any Fed chairman trying to do something that’s just not likely….and spending my money to do it. Recessions and bear markets are just part of life. I hate ‘em, but I’m not naive enough to think they can be avoided.

Seems to me the Fed’s just throwing away good money after bad.

The market likes - no, loves - the news today anyway, but they loved it in December too. That lasted a whole two days.

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