4S Ranch Allied Gardens Alpine Baja Balboa Park Bankers Hill Barrio Logan Bay Ho Bay Park Black Mountain Ranch Blossom Valley Bonita Bonsall Borrego Springs Boulevard Campo Cardiff-by-the-Sea Carlsbad Carmel Mountain Carmel Valley Chollas View Chula Vista City College City Heights Clairemont College Area Coronado CSU San Marcos Cuyamaca College Del Cerro Del Mar Descanso Downtown San Diego Eastlake East Village El Cajon Emerald Hills Encanto Encinitas Escondido Fallbrook Fletcher Hills Golden Hill Grant Hill Grantville Grossmont College Guatay Harbor Island Hillcrest Imperial Beach Imperial Valley Jacumba Jamacha-Lomita Jamul Julian Kearny Mesa Kensington La Jolla Lakeside La Mesa Lemon Grove Leucadia Liberty Station Lincoln Acres Lincoln Park Linda Vista Little Italy Logan Heights Mesa College Midway District MiraCosta College Miramar Miramar College Mira Mesa Mission Beach Mission Hills Mission Valley Mountain View Mount Hope Mount Laguna National City Nestor Normal Heights North Park Oak Park Ocean Beach Oceanside Old Town Otay Mesa Pacific Beach Pala Palomar College Palomar Mountain Paradise Hills Pauma Valley Pine Valley Point Loma Point Loma Nazarene Potrero Poway Rainbow Ramona Rancho Bernardo Rancho Penasquitos Rancho San Diego Rancho Santa Fe Rolando San Carlos San Marcos San Onofre Santa Ysabel Santee San Ysidro Scripps Ranch SDSU Serra Mesa Shelltown Shelter Island Sherman Heights Skyline Solana Beach Sorrento Valley Southcrest South Park Southwestern College Spring Valley Stockton Talmadge Temecula Tierrasanta Tijuana UCSD University City University Heights USD Valencia Park Valley Center Vista Warner Springs

If you have ever doubted that Wall Street is thriving on Main Street's pain, think about today's (March 26) stock market action. Federal Reserve head Ben Bernanke is manipulating stocks upward once again -- something he has been doing for several years. Whenever Bernanke, or the Fed itself, hints that the economy is weak and more liquidity may be needed, stocks leap. Over the weekend, Bill Gross of bond fund PIMCO said that the Fed might hint that it would launch another round of buying bonds to artificially drive down long term interest rates. The first two times the Fed had such programs, called QEI and QEII, stocks leapt, as they should when money gets easier. (Short rates are already at almost zero, and have been since 2008. The Fed says they will stay that low until 2014.)

This morning Bernanke said that the improvement in employment might not be sustained. Wall Street, already primed by Gross's remarks, responded: stocks are soaring. If the employment situation actually improved, the Fed could not longer feed Wall Street all this juice. So Wall Street prays that Main Street will continue in the doldrums. This Fed market manipulation is exacerbating one of our worst economic problems: the extremely uneven distribution of wealth and income. More than 90% of financial assets, including stocks, are owned by the richest 10%, and the top 1% own 38%. This madhouse creation of liquidity, in which foreign central banks are participating, will end very unhappily with either inflation or financial bubbles or both. When? No way to say. Personally, I have been buying stocks for some time. This will go on for awhile before the crash. I could be wrong, of course.

Comments
4

Ben Bernanke and Tim Geithner should have been fired 10 years ago, same with Holder. Obama has been the biggest let down ever for me.

I think they are calling what Ben does ZIRP;

The zero interest rate policy is a macroeconomic concept describing conditions with a very low nominal interest rate, such as those in contemporary Japan and, since December 16, 2008, in the United States. It can be associated with slow economic growth.

http://en.wikipedia.org/wiki/Zero_interest_rate_policy

March 26, 2012

All Bernanke has to utter is the word "accommodative," as he did this morning, and stocks jump. Historically, the zero interest rate policy may goose the stock and bond markets, but eventually it is disastrous. And it really doesn't stimulate the economy that much. It has done little to nothing for Japan and little for us. Think of it this way: we suffered the worst downturn and the weakest recovery since the Great Depression, but stocks have doubled since 2009. Stocks are responding to liquidity, not to the economy. Best, Don Bauder

March 26, 2012

Don, you are one smart cookie-thanks for that response, it was on the money...

March 26, 2012

Even though all this worldwide, central bank-manufactured liquidity will end unhappily, and perhaps calamitously, the question is when it will end. For now, I have climbed to about 31% in stocks (virtually all yielding 3.5% to 7%), mostly blue chips, for I don't think armageddon will come soon. But I imagine I will get trapped. You can't time the market. Best, Don Bauder

March 26, 2012

Sign in to comment

Sign in

Art Reviews — W.S. Di Piero's eye on exhibits Ask a Hipster — Advice you didn't know you needed Best Buys — San Diego shopping Big Screen — Movie commentary Blurt — Music's inside track Booze News — San Diego spirits City Lights — News and politics Classical Music — Immortal beauty Classifieds — Free and easy Cover Stories — Front-page features Excerpts — Literary and spiritual excerpts Famous Former Neighbors — Next-door celebs Feast! — Food & drink reviews Feature Stories — Local news & stories From the Archives — Spotlight on the past Golden Dreams — Talk of the town Here's the Deal — Chad Deal's watering holes Just Announced — The scoop on shows Letters — Our inbox [email protected] — Local movie buffs share favorites Movie Reviews — Our critics' picks and pans Musician Interviews — Up close with local artists Neighborhood News from Stringers — Hyperlocal news News Ticker — News & politics Obermeyer — San Diego politics illustrated Of Note — Concert picks Out & About — What's Happening Overheard in San Diego — Eavesdropping illustrated Poetry — The old and the new Pour Over — Grab a cup Reader Travel — Travel section built by travelers Reading — The hunt for intellectuals Roam-O-Rama — SoCal's best hiking/biking trails San Diego Beer — Inside San Diego suds SD on the QT — Almost factual news Set 'em Up Joe — Bartenders' drink recipes Sheep and Goats — Places of worship Special Issues — The best of Sports — Athletics without gush Street Style — San Diego streets have style Suit Up — Fashion tips for dudes Theater Reviews — Local productions Theater antireviews — Narrow your search Tin Fork — Silver spoon alternative Under the Radar — Matt Potter's undercover work Unforgettable — Long-ago San Diego Unreal Estate — San Diego's priciest pads Waterfront — All things ocean Your Week — Daily event picks
4S Ranch Allied Gardens Alpine Baja Balboa Park Bankers Hill Barrio Logan Bay Ho Bay Park Black Mountain Ranch Blossom Valley Bonita Bonsall Borrego Springs Boulevard Campo Cardiff-by-the-Sea Carlsbad Carmel Mountain Carmel Valley Chollas View Chula Vista City College City Heights Clairemont College Area Coronado CSU San Marcos Cuyamaca College Del Cerro Del Mar Descanso Downtown San Diego Eastlake East Village El Cajon Emerald Hills Encanto Encinitas Escondido Fallbrook Fletcher Hills Golden Hill Grant Hill Grantville Grossmont College Guatay Harbor Island Hillcrest Imperial Beach Imperial Valley Jacumba Jamacha-Lomita Jamul Julian Kearny Mesa Kensington La Jolla Lakeside La Mesa Lemon Grove Leucadia Liberty Station Lincoln Acres Lincoln Park Linda Vista Little Italy Logan Heights Mesa College Midway District MiraCosta College Miramar Miramar College Mira Mesa Mission Beach Mission Hills Mission Valley Mountain View Mount Hope Mount Laguna National City Nestor Normal Heights North Park Oak Park Ocean Beach Oceanside Old Town Otay Mesa Pacific Beach Pala Palomar College Palomar Mountain Paradise Hills Pauma Valley Pine Valley Point Loma Point Loma Nazarene Potrero Poway Rainbow Ramona Rancho Bernardo Rancho Penasquitos Rancho San Diego Rancho Santa Fe Rolando San Carlos San Marcos San Onofre Santa Ysabel Santee San Ysidro Scripps Ranch SDSU Serra Mesa Shelltown Shelter Island Sherman Heights Skyline Solana Beach Sorrento Valley Southcrest South Park Southwestern College Spring Valley Stockton Talmadge Temecula Tierrasanta Tijuana UCSD University City University Heights USD Valencia Park Valley Center Vista Warner Springs
Close