Category Archives: Dollar

Yellen Takes Off Training Wheels

151218-YellenJanet Yellen took the training wheels off the economy on Wednesday. After seven years of near zero percent interest rates, the Fed hiked rates a quarter percent.

Meanwhile, Congress passed a 2,000 page,  1.2 trillion dollar budget. That tacked another 157 billion onto the 18.5 trillion dollar national debt.

Yellen

On Friday the Dow dropped 370 points.

David Stockman says, “sell the bonds, sell the stocks, sell the house”. IBD wonders if the markets know something the Fed doesn’t.

Fed Up

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The Fed has kept the stock market and, so it claims, the U.S. economy afloat with low interest rates. The Dow lost 1500 points in the past week. World economic growth is stuck in the mud.

And with interest rates near zero, the Fed is low on flotation devices.

If income inequality is your thing, cheer up. Jeff Bezos lost $2.6 billion on Monday. Bloomberg has the fat cat score card here.

Backdoor Wall Street Bailout

131114-fed-yellen-easy-money-backdoor-bailout-wall-streetOur magic president has appointed a new Fed chief to make more magic money.

Janet Yellen’s Senate hearing for approval to succeed Ben Bernanke began yesterday.

Backdoor Wall Street Bailout

Andrew Huszar, a former bond buyer for the Fed, wrote an interesting apology in the WSJ this week for his role in “quantitative easing”.

He says that the Fed never bought a mortgage bond in its 100 year history until he was hired in 2009 to buy $1.25 trillion of the things! In a single year. According to Huszar Bernanke spun the scheme as a plan to help Main Street but it was really “the biggest backdoor Wall Street bailout of all time”.

Chairman Ben Bernanke made clear that the Fed’s central motivation was to “affect credit conditions for households and businesses”: to drive down the cost of credit so that more Americans hurting from the tanking economy could use it to weather the downturn.

QE may have been driving down the wholesale cost for banks to make loans, but Wall Street was pocketing most of the extra cash.

Bernanke’s Economy

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Bad news for the economy is good news for Wall Street these days.

Yesterday Bernanke announced it was too early to taper off on his greenback spinning wheel. He’ll continue to pump $85 billion per month into the sluggish economy through quantitative easing. The magic money is conjured up when the Fed buys Treasuries and mortgage backed securities.

The sorcerers on Wall Street were pleased and stocks hit record highs.

Rumpelstiltskin

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Rumpelstiltskin spun gold out of straw. Fed chief alchemist Bernanke spins dollars out of…I have no idea. But Wall Street somehow got the idea that he was thinking of not doing it any more and didn’t like it one bit.