Three Reasons Investors Are in a Funk Gauging from investors’ current bleak mood, you’d guess that the Dow Jones was down horrifically — to 6,000 or 7,000 or even lower. Instead, while recent volatility has admittedly been through the roof, the Dow has “only” dropped to just below 11,000, as of this morning. That’s less than 15%...Read More
Ben Bernanke’s Unintended Consequences The good news? Ben Bernanke has confounded naysayers, and proven that The Federal Reserve really can resuscitate (levitate?) the stock market — now up 85% from The Crash of ’08 lows. How? By printing money — lots and lots of money — and driving interest rates into the toilet (and keeping...Read More
Next Up: Resolving Fannie Mae, Freddie Mac Take a load off Fanny Take a load for free Take a load off Fanny And (and) (and) you can put the load right on me –Lyrics, “The Weight” With Quantitative Easing 2.0 playing out now, what’s next up for Congress and the President, economy-wise? Resolving the financial...Read More
Is the Fed Repeating Wall Street’s Sins? Joe Nocera: At a certain point, Wall Street ran out of clients to sell [securitized debt] to. So the only way it could keep the machine going was to buy it themselves. Jon Stewart: So, they infected themselves. At the end, they themselves became vampires. [Which suggests] a...Read More
“Certificates of Confiscation” Once Again? Certificate of Confiscation: 1970’s term for bonds, certificates of deposit (CD’s), etc. yielding less than (rising) inflation. How do you get people (and corporations and banks) to stop hoarding cash, and put it to work, stimulating the economy? Reduce interest rates to zero. But what if that still doesn’t do...Read More
Disconnecting the Heart Monitor In my post last week titled, “Approaching the Zero Bound,” I characterized the Fed’s plan to buy hundreds of billions ($600 billion, it turns out) in U.S. debt as a “hypodermic needle to the economy’s heart.” Actually, that analogy is not quite complete. The Fed’s money-injection plan, also known as quantitative...Read More
