General discussion

Bernanke Extends Democratic Party Bailout As QE3

In truth that's what it should be called since it's all concentrated on pulling all the bad mortgage loans out of the economy, which was given by banks forced into giving subprime loans by Barney Franks and other Democrats during the Clinton years. It began to build in the Clinton years, continued across the Bush years, and began to collapse as Obama took office. It should be called the Big Coverup, but I'll settle for everyone realizing it's the Federal Reserve bailing out the Democrats, which of course we all will have to repay one day in taxes.

Bernanke and his Helicopter of money.

."The Committee agreed today to increase policy accommodation by
purchasing additional agency mortgage-backed securities at a pace of $40
billion per month. The Committee also will continue through the end of
the year its program to extend the average maturity of its holdings of
securities as announced in June, and it is maintaining its existing
policy of reinvesting principal payments from its holdings of agency
debt and agency mortgage-backed securities in agency mortgage-backed

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(NT) Can't figure out why the stock market loves it
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It always loves inflation

Remember, inflation causes all prices to go up, including stocks. Look at the inflation of value since 1930's and then compare to the stock market valuation. Both go up together. If they were at least inflating the govt out of debt that might be some redeeming value, but both the debt and the money supply will be inflated and that can never be good.

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Just meant that if it was bad news the markets fall

so they either think this is good news or a chance to grab a quick buck and run away. I don't play around in the market and I know you tout ETFs but I'm the kind that can lose 99 out of 100 coin flips so stay clear of gambling. I'd gotten close to 10% for a while on my early 80s IRA but that eventually turned into loss. I can now see what would happen even to Roth plans and post-tax 401ks tied to investment growth if Obama gets his way to tax investment income as regular income. Those who've paid taxes up front in the hope of reaping later benefits from investment income will not only invest less money but could be taxed even more. It won't be the wealthy who will suffer, however. It will be the regular earner who needs to sacrifice in order to save for their later years. Those persons will be in for a big surprise when it's time to draw down on their savings the same way that I learned a lesson about how traditional IRAs had no design to help the saver.

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Here's a good article about it.
Article on latest Bernanke Move and who it really benefits.

"QE drives up the prices of assets, especially financial assets. And
most of the financial assets in America are owed by the wealthiest 5
percent of Americans.
According to Fed data, the top 5 percent own 60 percent of the
nation's individually held financial assets. They own 82 percent of the
individually held stocks and more than 90 percent of the individually
held bonds.
By helping to reinflate the stock market in 2009 and 2010, the Fed created a two-speed recovery.
The wealthy quickly recovered much of their wealth as stocks doubled in
value. But the rest of the country, which depends on houses and jobs
for their wealth, remained stuck in recession.
Put another way, most Americans have most of their wealth tied up in
their houses (about 50 percent for most). For the top 5 percent, homes
account for only 10 percent of wealth, while financial assets account
for between one third and 40 percent.
By boosting the value of financial assets, Fed has helped the economy of Richistan but not the broader United States.
Bernanke is obviously aware of this criticism, which is why the
latest round of easing is focused on mortgages. But here too, there is a
divide between the rich and the rest. Despite lowered rates, banks
remain strict on lending, restricting access to credit for most
Americans. The wealthy and the asset-rich, however, will now enjoy even
lower rates on their credit."
(more on page)
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The market loves it...

The market loves it because it dumps a mass of money into stocks. Bernanke in effect started printing money with no limit. The money is used to buy treasury bonds. These sales proceeds are used to buy bad debt held by the banks. Good for the banks, it lets them turn bad debt into money in hand.
Now, what do they do with that money? They will hold it until they see what happens in the election. So they need a park it for a while. Bonds are yielding almost nothing. But conservative parking it in the stock market will yield 4 to 5 percent. So they park it in the market, and that influx causes the market to go up.
Think about what Bernanke did, saying that they will pump 40 Billion into the press every month with no established limit. Romney has indicated that he would replace Bernanke if elected. That would be a stopper. Got it, basically Bernanke set it up so the market will climb, giving the impression of things getting better, as long as he is in his position. If he is removed, the money flood ends and the market drops drastically. He was linking his holding his position to the run up in the market, a move to create security for his job.
Unfortunately, this newly printed mass of money runs down the value of the dollar, so the price you pay for gold and other commodities increase. But eventually the printing of money must stop, and the total mass of newly printed currency will cause a serious problem with inflation

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Nice re-writing of History, James, Sub Prime Mortgages

were only one small part of the Wall Street collapse, for which Wall Street itself bears full and exclusive responsibility. They didn't have to package Sub Prime Debt as Triple A securities and sell them everywhere, but they did, and that's what caused the collapse. Had they taken the bad debt, and said, "This is Bad Debt, we won't touch it" the whole thing would have died before too many got hurt. Instead they off loaded them into the Derivatives Market, and we got the Bush Crash of 2007-8. If 1929 bears Hoover's name, and it does, the 2007-8 Crash bears Bush's. The sky was falling all through 2008, and he did nothing, leaving it all to his successor to clean up.


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I don't see that anything has been cleaned up

It's been swept into a less dirty room.

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you're right

they took the crap pushed off on them by subprime lending, bundled it into CDO's and dumped it off on others to hold the bag on it. That was their way out of the mandates coming out of the Clinton years concerning lending. Shove the bad debts off to someone else, leave them holding the bag when the bottom falls out of it. What goes around, comes around, in a financial way of looking at it. Now the Federal Reserve is trying to buy up all that bad debt, sort of a new bailout of the mistakes initiated during the Clinton years, across the Bush years, and finally coming home to roost during the Obama years.

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