The last few days will no doubt be included in the Fed's perverted little scrapbook and many investors as well as the wild roller coaster ride saw the market basically cover nearly as much ground as it has moved since the beginning of the year, but essentially remain unchanged. As I watched the market bounce around like a maniac on a pogo stick, some thoughts and questions came to mind, that I figured I would share.
- Immediately, when today's Term Auction Facility was announced I thought, "Why wasn't this announced yesterday?"
- Extending the the puzzlement above, I wonder if anyone was privy to this information, allowing for a VERY profitable two days of trading - much more profitable than the futures/spot "reporting error" that occured back in February.
- Many people believe this was a response to the market's reaction to the disappointing 25bp, but somehow I don't think Bernanke recieved a ton of angry phone calls from Wall Street, Hank, and Dubya, and said "Don't worry, I'll whip something up by tomorrow morning"
- Rather I think this was the equivalent of a fire extinguisher they developed, put behind glass with a sign saying, "In Case of Emergency, Print Money" and in this case they were forced to use it.
- Didn't a Fed cronie hint that the Fed was toying with an idea of using an alternate method of providing liquidity to the markets and would discuss it at its December meeting? (Can't find any links to articles but feel free to share.
- Is its action today just a way in which the Fed will try to make its 100bps of rate cuts a reality. Since its old tricks have failed to be effective
- Does anyone find an issue with the fact that this process is completely opaque, subject to expansion, and could further add moral hazard to the system?
- Is this essentially telling companies such as Citi and Bear Stearns if you need money don't go to Abu Dhabi or China - "If you need money then you come to me!" and doesn't think create an image of Pauly from Goodfellas in your head.
- Does this have anything to do with the fact that the SIV bailout plan is falling apart?
- Does the collusion with other countries show just how weak the dollar is (along with our credibility). We have moved from telling other nations "It's our currency but your problem" to "them now telling us, "There is a real problem with your currency.
- Does this $40 billion injection enable Wall Street to pay year end bonuses, and is it really politically wise under these conditions to pay a bonus this year.
- Is this why they all downgraded each other today - so as not to be seen as benefiting from such greed?
- How odd was the Citi CEO press release two minutes before the Fed?
- Did the structure of this announcement allow dollar holders abroad to sell dollars into yesterday's rally, before today's announcement put the greenback back in its place?
- Who or what sold off furiously around 3 pm today, as the major indices dropped 50 bps in a few minutes?
- Is this Term Auction Facility the equivalent of issuing the major banks and brokers a Federal Reserve equivalent of the American Express Black Card?
- How many more bailouts can be rolled out before people really start to get pissed off and turn off "Dancing with Stars" to scrutinize all these undertakings?
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