The Fed Train is on a Roll

By Wade Henderson | March 18, 2009

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.

As stated in the Wednesday March 18, 2009 edition of the NY Times:

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.

Last fall the Central Bank held $900 billion on its balance sheet and just prior to this announcement it was sitting at $2 trillion which proved the strong measures that the Fed is prepared to take to get the 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.

Okay, there is more money availableso what is the big deal? The Big Deal is that now there is more funding available for lenders to do more loans to residential as well as corporate clients including small business.

The biggest problem is though who will go first? Someone has to start buying but if they do not have the income to do this, what are they going to pay for the purchases with? If you go to the furniture store and buy a new couch, and do not have a job how will you pay for it? Sure the store may be able to process your order, pay its staff, order from their supplier who in turn orders the raw materials to make the couch, but at the end of the day if you can not pay for it, then no one gets paid.

The US and Canadian Governments need to start buying more since they are the ones with the money. One they get the orders in then the suppliers will start hiring and the people that are hired will start buying so the suppliers will start hiring and so on

Since we are seeing such bold moves on the available funds, I am certain they are gearing up to do just that. Get the money ready and then start buying.

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.

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