In a very real sense confidence IS liquidity. The Fed has taken 2 trillion of questionable assets and has pledged to up to 8 trillion. There are 2 lawsuits against the Fed now to disclose the assets. One from Bloomberg and one from, interestingly, Fox news. The Fed is stating that disclosure would cause lack of confidence. Actually they are citing a trade secret statute in their reason for not disclosing. Like it is the formula for Coke or something.
Ironically, the only thing that will bring back confidence is transparency which they refuse to give. You have to ask yourself WHY are Bloomberg and Fox are so nervous about those assets? Until everything is thrown on the table and all losing bets are accounted for it’s a losing game and no confidence will return to the credit market, IMO
The structured finance market is dead and they are gambling with our money that it will come back when it is obvious it will not. What percentage of GDP was that? Those assets are losing value daily and foreign investors know this.
Adhering to an economy that relies on bubbles, over consumption and failed structured finance to survive wont and will only end in complete ruin. There is no plan b.
