GOODBYE INVISIBLE HAND, HELLO NANNY STATE: Federales Plan To Nationalize Junk Mortgage Crisis


WALL STREET JOURNAL: The federal government is working on a sweeping series of programs that would represent perhaps the biggest intervention in financial markets since the 1930s, embracing the need for a comprehensive approach to the financial crisis after a series of ad hoc rescues.

At the center of the potential plan is a mechanism that would take bad assets off the balance sheets of financial communism.jpgcompanies, said people familiar with the matter, a device that echoes similar moves taken in past financial crises. The size of the entity could reach hundreds of billions of dollars, one person said.

Another proposal would be the creation of federal insurance for investors in money-market mutual funds, coverage akin to the insurance that currently safeguards bank deposits. The move is designed to stem an outflow of funds as consumers start to worry about even the safest of investments, a sign of how the crisis is spreading to Main Street. There is $3.4 trillion in money-market funds outstanding. MORE

NEW YORK TIMES: Realizing that its case-by-case approach was not enough, the federal government started to put in place on Friday a sweeping plan to restore confidence in the financial markets. Markets around the world reacted by shooting up, with the Dow Jones industrial average up more than 390 points.

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