The Fed officially announced a second round of money printing this week. The central bank plans to buy $600 billion worth of Treasury securities by June of next year. To pay for the bonds, the Fed will deliver electronically printed money to the member banks. One of Bernanke’s goals with this second round of money printing, as described in his November 5 Washington Post op-ed, is to inflate stock prices. Looking past the fact that this is a highly irresponsible policy decision, the question is, will it be successful? Generally when the Fed wants to inflate asset prices, it has no problem … [Read more...]
Archives for November 2010
Wilmington Trust “Take-under”
The $10 billion, Delaware-based Wilmington Trust was acquired this week in a “take-under” by M&T bank. The take-under was announced the same day that Wilmington reported a massive unexpected loss due to souring construction loans. The regional banking sector continues to struggle with loan losses. … [Read more...]
Featured Video: Debate on Fed’s $600 billion Money Printing Crusade
After watching this video try to you guess which of these Bloomberg guests worked for a major Investment Bank for 30 years? … [Read more...]
QE 2 is Risky
QE2 is Risky and Should be Limited - Martin Feldstein, Financial Times “The Federal Reserve’s proposed policy of quantitative easing is a dangerous gamble with only a small potential upside benefit and substantial risks of creating asset bubbles that could destabilise the global economy. Although the US economy is weak and the outlook uncertain, QE is not the right remedy…Like all bubbles, these exaggerated increases can rapidly reverse when interest rates return to normal levels. The greatest danger will then be to leveraged investors, including individuals who bought these assets with … [Read more...]