$200 Billion in Treasuries lent to primary dealers to serve as a way to provide short-term liquidity for mortgage securities. 28 day floating exchange, basically.

Is this really "good news"? Or yet another stick-save curiously timed as we hover over the abyss, about to crash down into perdition?

Hmmmm.......

Well, loaning money against illiquid collateral can be a good business, provided the haircut prevents losses. Will it? Maybe.

How does CNBC report it?

The Fed once again steps in to arrest a market decline.

Well, at least CNBC has finally woken up to The Fed's New Role - insuring that the stock market doesn't adjust to the "real values" - or at least, doesn't do so "all at once."

Does it work? Short-term (like for a day) it will "calm people down" but it does nothing to make people want to buy crap.

Nor does it address the underlying problem with housing - its too damn expensive relative to incomes!

But the long term isn't the point, is it? Clearing the market isn't the point.

Pumping the stock market the day after key technical levels were broken to prevent a cascade decline? Now that's a point, even though technically "The Fed doesn't care about equity markets."

The interesting part of this is that suddenly the FX markets "got religion" and the dollar started moving higher! Why?

Maybe its a realization that The Fed isn't going to be shoveling more policy cuts (e.g. FFT lowering) at the market - The Fed "gets it" in that it won't devalue to toilet paper status the only thing that it has to sell and buy - dollars.

Is this a step towards monetization of bad mortgage paper?

You better hope not because if so, the economic impact of that will be catastrophic for the middle and lower classes in this nation!

Frankly, I doubt it, and the FX market clearly says "no".

It certainly does appear that contrary to Bernanke's moniker "Helicopter Ben" he has gotten schooled more than a bit by the market in terms of the limits that policy has and the "side effects" that come with going too far down that rabbit hole.

Nobody can argue with the realities of the Dollar - or commodities - against his "rate cuts."

For today, "liquidity" looks to be what the market wants, and positive carry appears to be showing its head again (good for banks) in the Interest Rate complex.

In the longer term of course bad paper remains bad paper, and nothing The Fed (or anyone else) can do will fix this. You can provide all the short-term loans you want, but if someone can't pay, they can't pay.

So in the short term you're going to get a move higher, money will come out of the Treasury complex and back into equities, especially banks and mortgage lenders.

But in the longer term will it "restart lending"?

Nope. It sure won't.

Not until we have clarity on who is and is not broke, and this "facility" does exactly nothing to answer that question!

In any event enjoy the ride - unfortunately when this one hit I was in the shower, and wasn't at the terminal - that would have been a nice way to make a fast $10 - or $100 - grand.