Eleven Year Anniversary

The month of March was a busy time eleven years ago.  The Chairman of the Federal Reserve concluded that the central bank had to act aggressively and engage in an expansionary monetary policy in order to prevent a more serious recession.  

The Fed's goal was to keep adjustable-rate mortgages affordable because they had become the bank of last resort - the only bank willing to lend. 

Additionally the Fed announced it would lend $200 billion in Treasury notes to bail out bond dealers who were hopelessly stuck with a crap-ton of mortgage-backed securities and other collateralized debt obligations.  Because these securities had become garbage there was no longer a secondary market for these debt products.     

Worst of all, absolutely nobody knew for sure who owned the bad debt or how much was lurking out there.  All buyers of debt instruments had become terrified of purchasing or selling from one another.  No one wanted to get caught with any additional toxic junk on their books. Banks were playing a massive shell game hoping that no one would get caught with more bad debt and the Fed was juggling several balls in an attempt to keep liquidity in the financial markets. 

The skies continued to darken as the shit storm gathered.