Grantham: ‘Almost Criminally Inept Fed’ The Federal Reserve’s asymmetric policy of stimulating stock moves by setting artificially low rates and then leaving the bull markets, when overstimulated, to bubble over, is dangerous. It is probably the most dangerous thing to inflict on a peace time economy with two possible exceptions — runaway inflation and a...Read More
Boon For Wall Street, Goose Egg for Savers Want to place a bet on how long the Federal Reserve’s current policy of zero percent interest rates (“ZIRP”) continues? Consider who it helps — and hurts: ZIRP Winners: –U.S. Treasury (debt service kept artificially low)— Wall Street (free money — how nice!)–Mega-Corp Borrowers (ditto. IBM just...Read More
The Link Between 0% Interest Rates, Spiking Gold When “risk-free” cash keeps paying a guaranteed loss, then a growing number of people will, in due course, start seeking shelter elsewhere. –“What The Economist Doesn’t Know About Gold”; Seeking Alpha (6/29/2010) The above quote is from the best piece I’ve seen yet explaining why gold is...Read More
Which Way Mortgage Rates? According to a certain (contrarian) school of thought, whatever everyone expects to happen . . . won’t. In the housing market, there seems to be almost universal agreement at the moment that mortgage rates are going to be higher — perhaps dramatically — in the second half of 2010 and beyond....Read More
Fed Rate Bump Today’s leading financial stories are: a) the Federal Reserve’s apparently surprise decision to raise interest rates on short-term bank borrowing; and b) the market’s reaction to same (playing out now). My take? The action itself is relatively trivial: hiking rates on some arcane, overnight interest rate from .5% to .75% (yes, that’s...Read More
The Fed, Commodity Prices & Economic Recovery Twelve hundred miles (give or take) from Wall Street, me thinks that a not-so virtuous cycle has emerged regarding the government’s various and sundry efforts to nurse the economy back to health. The dynamic goes something like this: Step 1: the Federal Reserve and Treasury essentially borrow and/or...Read More
