I ran across many excellent one liners or short snippets that were insightful and/or funny regarding the Fed decision to buy more treasuries with money they make on MBS assets they bought with treasuries. I know that sounds weird, but this is what passes for monetary policy.
My own take on the Fed move today is that they are now deeply enmeshed with Wall Street. As I wrote last night, unable to influence the real economy the Fed will now make sure Wall Street is getting all they need to keep the indices up. Absent that outlier (a higher stock market) there has been no real improvement in the economy in a long time. Everyone on the street knows it, and I think the Fed does as well. There does seem to be a little gamesmanship going on here though; the Fed does not want to keep doing these things and would prefer Congress do something while the Congress is scared to death of the November elections and would prefer the Fed to do all the work. Classic indeed.
On to the rip offs.
The Housing Time Bomb noted a crazy day for the 30 year bond and closed with:
Expect some serious unintended consequences from today's policy shift. We already saw one today with the move in the 30 year.
Folks, you need to seriously ask yourself why the Fed decided to pile into treasuries when rates are at all time lows. I mean what is the point? It's not as if this is going to push rates much lower.
Short term treasuries are about as crowded a trade right now that I have ever seen.
Keeping things short and sweet, The Reformed Broker offers:
So the Fed Groundhog came out of his hole at 2:15 pm today, sniffed the air, took a glance at the data and decided that there will be 6 more months of kitchen-sink policy. He certainly signaled a continuation of economic winter.
You knew Paul Krugman was going to be unhappy unless a 5 trillion dollar program was announced, and he does not disappoint:
Roughly speaking, it has gone from a completely crazy policy of monetary tightening in the face of massive unemployment and incipient deflation, to a policy of standing pat in the face of same. Whoopee.
Does that make this a whoopee cushion move Paul?
The Golden Truth wonders:
The FOMC announced today that the Fed will be buying more Treasury debt to help support the economy. Can someone please explain to me how enabling the Government to borrow even more more money actually supports the economy?
Sorry, I cannot help with the answer.
This Yahoo Finance piece was full of fun lines:
"I don't think they are going to raise interest rates until it is very clear that unemployment is moving definitively lower and that doesn't look likely until late 2011," said Mark Zandi, chief economist at Moody's Analytics.
But was it not Zandi that wrote the paper "How the Fed/Treasury Saved the World"? I am thinking of a term for this guy that I have not heard in a long time...give me a minute...it is.....POSER.
"The Fed talked loudly but carried a small stick," said Joel Naroff, president of Naroff Economic Advisors.
Another one ultra long SPY going into the meeting. Poor guy.
"The news is positive but not meaningful," said John Merrill, chief investment officer of Tanglewood Wealth Management in Houston. "The money is a pittance."
You are welcome.
The NY Times header reads: Fed to Buy U.S. Debt, Saying Recovery Has Slowed
This time it's different.
While not related to today's action, Kid Dynamite notes a Ben Bernnake quote from earlier:
Unlike the federal government, every state except Vermont is required to balance its budget, forcing spending cuts, tax increases or both -- actions Federal Reserve Chairman Ben Bernanke said last week are contributing to the nation’s sluggish recovery.
Translation: Our inability to spend beyond our means is hurting our "recovery."
All you need to know in one sentence.