How is the billions of dollars of foreign infusion money beinb pumped into the American Economy?

I keep reading in the headlines that these foreign banks are going to help the American Economy by infusing cash and making loans and loan guarantees. Who are they giving these loans too and how is that money making it's way into valuations of businesses and infrastructure and the common person in the United State's wealth? Where is this money now? Where is it going to be? What will happen to stocks as a result of this money infusion?

Big question. The infustion is going to banks and major Wall Street firms who have a cash shortfall as a result of the investments they made in sub-prime mortgages. This cash infusion takes the form of loans and or purchase of some part of the company. That cash goes into the account of these companies. They use the cash to meet their obligatiions, whatever they may be. The advantage to the US company receiving the cash is that they maintain liquidity, enhance investor confidence and their stock is ultimately more valuable (at least theoretically) because the concern that they will go under is lessened. If the US companies were not to go under it would lessen investor confidence which could lead to a sell off of stocks and people pulling their money out. Further, if the firms were to close we would see a significant rise in unemployment and an even more severe shortage of cash to loan for things like home mortgages and cars. This shortage of available cash to loan could even more severely impact the already depressed auto and home industries. Hope this helps. There is a great deal of adverse consequenses which could occur if the additional cash infusion was not available.

for the most part they buy stocks and treasury bonds,,,,,,,,,,,,,,(and banks........Citicorp ,,,,,,,, by Dubai)

DECEMBER 19th: Fed auctions off $20 billion at 4.65 percent!
"The Federal Reserve said on Wednesday it auctioned $20 billion in a special operation to thaw credit markets at an interest rate of 4.65 percent, a higher-than-expected rate that suggested banks were eager to pad their cash reserves.
Demand for the funds and how much banks were willing to pay offered a signal of how deep financial distress is and how important a role the Fed and other central banks can play in easing the strains." - http://www.whatreallyhappened.com/archiv...

These "banks" are out to protect themselves. It is likely that our institutions already owe them a great deal of money. The "infusions" (just like any budget cuts) will go toward interest pmts NOT domestic and economic development.

I didn't know Fox news put out a newspaper... what headlines. Other countries wanting to help us? I'm sure you saw what happend to leaders in UK, Australia, and Spain when they tried to befreind our current administration... They got removed from office. The only foreign infusion of cash you will see is the international investment firms buying our real estate at half price once things really get bad!

Take as an example the story below from this morning and wrap your head around it... Does it sound like we are good candidate for a loan? (Keep in mind the Saudi's are the richest country and men in the world):



Fatwa against the dollar?

A message issued by 26 leading clerics warns that inflation has reached intolerable levels in the Gulf kingdom.

While it does not vilify the dollar explicitly, the apparent political aim is to undermine the country鈥檚 dollar peg.

鈥淭he rulers should seek to try to remedy this crisis in a way that would ease people鈥檚 suffering.鈥?

鈥淲e direct this message to the rulers and officials: we remind you of Prophet Mohammad鈥檚 words that you are shepherds who are responsible for your flock,鈥?it said.

The statement was posted across the Islamic world. The background to this has been a raging debate in Gulf religious and economic circles about the destructive effects of the sliding dollar.

Among the lead-authors is Sheikh Nasser al-Omar, known for his fatwa against US-led forces in Iraq.

He has long preached the collapse of American-led capitalism, and now sees a perfect moment to plunge the knife. We can guess that al-Qaeda Inc is thinking along the same lines.

Read the rest here: http://blogs.telegraph.co.uk/business/am...

This is a "capital markets" question. Economies worldwide depend on capital investment (machinery, infrastructure, computers, telephones) to make labor and management more productive and to make money more or less available for buyer debt financed purchases (consumers and businesses use a lot of debt for purchases).

If an economy grows, it benefits employment (the common person benefits in this way) and makes the cost of money more affordable (home loans, car loans, credit card debt etc.).

Stock prices reflect the estimated long term profitability of the company that issues the stock, as well as short term economic data, consumer confidence, and the amount of money available for investment in equities, all of which are impacted by the amount and cost of capital. If money becomes less available, some companies may not be able to rollover their debt, may not be able to meet their obligations, and may have to reorganize (a less emotional term for what happens when creditors don't get paid -- bankruptcy).

Many foreign investors (governments and individuals) buy US debt (bonds, T-bills, corporate securities, mortgage backed securities, etc.) and tend to rollover these investments keeping the money in our economy. If they decide to remove these investments, we have essentially a "run on the banks" (generic idea) that negatively impacts the capital markets, and negatively impacts the entire economy, all the way down to individuals. The potential for a recession or depression goes up when the capital markets cannot provide sufficient capital to for our needs.

Loans (investment in asset backed debt) and loan guarantees (such as assured lines of credit to operate the economy) are fundamental to the operation of our economy.

Dr. T