Way back in the fall, economist Raghu Rajan warned us that the federal government could spend a ton of money on the bailout and yet still not spend enough to fix the problem. In today's headlines, news that two big recipients of government capital are still on the ropes. From the Wall Street Journal:
Stocks opened higher on Friday as the U.S. government injected $20 billion into Bank of America and guaranteed losses on over $400 billion in assets of both Bank of America and Citigroup.
In October, Uncle Sam invested $45 billion in Citigroup and $25 billion in Bank of America. Meanwhile, the European Central Bank just slashed the benchmark interest rate to its lowest level ever (sound familiar?) and Floyd Norris says the cheaper rate, Stateside, just might be showing signs of working.