Now part three, after soaring home prices and mortgage rates. It was drowned out by the hullaballoo over the Fed’s taper announcement. It came from Fannie Mae and Freddie Mac. It will drive up mortgage payments even more.
Discount retailer Loehmann’s did what other retailers – and a large number of other junk-rated companies – will do once the Fed allows a sense of reality into the markets: it filed for bankruptcy. Investors had refused to fund further losses.
Municipal bond investors, a conservative bunch eager to avoid rollercoasters and cliffhangers, are getting frazzled. Bankruptcies and the Fed’s taper cacophony are a toxic mix. So they’re bailing out of muni bond funds at record rate. Losses are mounting. And so are the fears.
The destruction of the dollar – so clearly visible against the Swiss Franc – took on a sudden virulent form in 1970. It has been going on just about all my life. And it’s still going on. When even the Swiss couldn’t handle it anymore, they too jumped into the currency war.
“It’s like you’re at a party and the keg is beginning to float. When do you leave the party? Where do you go?”
One of the few rebellious Fed heads, Richmond Fed President Jeffrey Lacker, fired a salvo when testifying before the House Judiciary Committee. He hit Wall Street risks covered by implicit government guarantees in the size of America’s GDP.
Stock market bubbles – they allow investors to make the mostest the fastest – don’t happen in a vacuum. They happen in a context. But this time, the context is different. Very different.
By Lee Adler, The Wall Street Examiner: Overlaying raw employment data from the Bureau of Labor Statistics with the Fed’s balance sheet offers surprising insights. Brief must-see video with excellent chart and explanation. Somebody should send it to Yellen.
We’ve known it all along, but now a former Fed insider confirmed it. QE, despite the Fed’s relentless efforts “to spin it as a tool for helping Main Street,” was “the greatest backdoor Wall Street bailout of all time.” But it’s complicated. He’s a revolving-door Wall-Street banker.
After five years of QE, and $3 trillion in new money floating around, we now have asset bubbles everywhere. Risk is no longer priced into anything. In fact, it has disappeared as a factor. And the Fed is publicly fretting about it.