The Federal Reserve is Fighting for Business
When the Fed said that they were going employ all available tools to promote economic recovery and to preserve price stability they were not kidding.
Today, the NY Times reported:
WASHINGTON ” Saying that the recession continues to deepen, the Federal Reserve announced Wednesday that it would pump an extra $1 trillion into the mortgage market and longer-term Treasury securities in order to revive the economy.
This comes as sign of confidence that the recession we have all found ourselves in has fewer days than many people predicted. So long as the Fed keeps this aggressive determination toward fixing the credit markets.
It has only been 6 months since the Central Bank was sitting with $900 billion on its balance sheet, now with nearly $2 trillion, the world knows that the Federal Reserve is serious about its convictions to get the US economy back on track.
In todays NY Times it also stated:
Fed officials have said they hope to expand the program next month, possibly to include the huge market for commercial mortgages, and both the Fed and Treasury hope the program will eventually provide up to $1 trillion in total financing.
So what does all this mean? Well for starters, it is expected that the Financial Institutions will be able to write more loans for people to buy more products to put more people to work so they can buy more and get more loans.and so on.
The biggest question is how will the process get started? We all know that companies are not going to hire with the expectation of future orders, and consumers are not going to start buying until they know they have jobs to cover the bills they createbut someone has to go first. Any volunteers?
It will have to being with the Governments of Unites States and Canada buying more products to create these orders to get the ball rolling. Loosing up the credit requirements without the backing of the orders can cause even more economic issues when those loans are defaulted on because the people that took the loans are not working.
In light of the actions at the Fed I am sure that this announcement is just a prelude to the increased purchasing by the governments and this had to be put into place first.
Next problem will be for companies to have the available funds needed to fill these orders. Even with the funds being available, most companies will not be able to get bank financing due to their financial performance over the last couple of years.
This is the time to speak to a Professional Commercial Finance Broker as they will have far more products available to them than the banks have so you can actually accept the orders and get them out the door.
My prediction is that Accounts Receivable Factoring and Purchase Order Finance will play a huge role in our immediate economy so it will not be a bad idea to get set up for it so you are not scrambling to find a funder.
Wade Henderson is a recognized Expert in the Business Finance World with over 13 years Experience in the Commercial Lending Field and a strong reputation for getting the deal done. Visit his Business Finance Website to put his experience to work for you.
