Any debate there is not a financial crisis is now settled. By the way, it is never the case that a financial crisis triggers a recession. It’s always the other way around.

The Fed has belatedly cut it’s Fed Funds target to 0-25 bps and now announced QE of $500 bn in treasuries and $200 bn in agency MBS.

Federal Reserve issues FOMC statement

The rate move is just a catch-down.

The QE is ‘over the coming months’ – so just formalizes increased POMO activity.

In its statement, the Fed makes reference to its alleged mandate, “Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability.”

This is boilerplate b-llshit. The Fed’s mandate is to facilitate the financing of the US government as smoothly and cheaply as possible. It better address the latent malfunctioning in the US Treasury market.

Importantly, the Fed also dropped the rate at the discount window to the same, and extended the terms to up to 90 days. Here we come JPM! Also b.s. is that this is targeting consumer credit. Puhlease!

Discount window adjustment: Federal Reserve Actions to Support the Flow of Credit to Households and Businesses

Finally, the Fed has dropped the rate on and extended maturities for USD swaps with other central banks – hello Financial Crisis, we’re back! Although this is a move you want to see if you’re hoping they can stabilize the USD crunch.

[ EDIT: and, by the way, they’ve dropped the reserve requirement to ZERO! ]

Coordinated Central Bank Action to Enhance the Provision of U.S. Dollar Liquidity

No mention of a commercial paper operation re-activation yet, as rumored.