What Happens When Artificially Low Interest Rates . . . . . Rise? Does “financial repression” have a better ring to it than “market manipulation?” If so, you’ll like this piece from today’s Wall Street Journal Op-Ed page: However well-intentioned, the Federal Reserve’s continued purchase of long-term Treasury securities risks camouflaging the country’s true cost of...Read More
Ben Bernanke, Flame-Thrower In an ideal world, investors would allocate capital to the stock market because the potential returns were attractive. Not because The Federal Reserve had obliterated all the alternatives. Yes, the Fed’s announcement that it would keep interest rates at zero through 2013 arrested the markets’ free fall (and has the added, noxious...Read More
Wasting a Perfectly Good Postage Stamp How low are interest rates today? So low that it literally doesn’t pay to spend 44¢ on a first class stamp to mail a deposit to my broker’s local branch, vs. using their (free) self-addressed envelope and sending it out-of-town. Time Value of Money? Infinitesimal Once upon a time...Read More
Fed Fall-Out — or, “Trying to Avoid Bubble Baths” Quick, which of the following is currently a bubble? A. Stocks B. Bonds C. Commodities D. Housing E. Commercial real estate F. Precious metals (gold, silver, etc. ) G. All of the above Answer: hell if I know. And judging from what I read these days ....Read More
Jumbo Mortgages for 4.75% The Federal Reserve anticipates that very low interest rates will be needed for an extended period. –Fed Reserve Chairman Ben Bernanke Mortgage interest rates have been so low for so long (2 years? 5 years?) that it’s no longer perceived as “new news” — but actually, it is. Namely, jumbo mortgages (over...Read More
Robbing Peter to Pay Paul Wall Street “THERE it is.” –“30 Rock” character Liz Lemon, upon identifying the inevitable flaw in each new, too-good-to-be-true suitor. Want a culprit for now-rising prices at the grocery store and gas pump? No, it’s not because of worldwide droughts and floods — headline-grabbing shortages in places like the Soviet Union are roughly...Read More
