The Bailout Kicks into High Gear

While most of us are languishing at work this week, thoughts of mashed potato and cranberry sauce dancing in our heads, the government has been tirelessly cooking up new plans to disperse bailout money. The Treasury and the Federal Reserve are especially keen on greasing the wheels of the credit market, where we are just starting to see banks recommence lending.

Let's take a look as some of the latest initiatives.

1) On Tuesday, the government announced it will buy $500 billion worth of mortgage-backed securities from the government-sponsored mortgage finance firms Fannie Mae and Freddie Mac. This action is aimed at freeing up credit for the purchase of houses, thus supporting the struggling housing market.

2) Also on Tuesday, the Federal Reserve Bank of New York said it will lend $200 billion to holders of securities that are backed by consumer debt. This move should free up credit and therefore promote lending to individuals in the form of auto loans, student loans, and credit card loans.

3) On Sunday, the government agreed to guarantee more than $300 billion of Citigroup's troubled assets and invest a fresh $20 billion in the bank. This is another case of the government coming to rescue of a financial giant considered "too big to fail." The collapse of Citi, which has over 200 million customers worldwide, would have shaken an economy already in the lurch.

It's important to note that these moves are interconnected: all are geared towards moving the economy to a more stable place. If banks become more comfortable lending and investors' confidence in major financial institutions is restored, then consumers will have more money to spend. That, in turn, means that businesses can create jobs.

Of course, these are long-term goals; right now any financial security we find is tenuous. So as you lay in your tryptophan-induced stupor this Thursday, remember: we're going to need to wait a long time before we can assess the real effectiveness of the government's most recent actions.

Gobble, gobble.