Tag Archives: fed
Backdoor Wall Street Bailout
Our 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
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
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.
Banking on Europe
The Fed sent a gusher of cheaper dollars to European banks. Robert Samuelson tells us what this means.
Front Runner
Rick Perry avoided the Iowa Straw Poll, but he seems to be the straw that stirs the drink at the Tea Party. While offending fellow Texan Karl Rove by using the T word to describe Ben Bernanke’s easy way with money, he galloped to the front of the GOP pack in the Rasmussen Poll.
