Surprisingly, a few days later Warren Buffett made the same observation. He said "the Fed is the greatest hedge fund in history." For Warren, this is great. He is on the receiving end of the biggest transfer of wealth in history from workers and savers to borrowers and speculators.
The recent conclave of the Fed's FOMC (Federal Open Market Committee) that met and rendered a decision has sent the Dow Jones index soaring to record...
Markets can process and react to good news or bad news, but they hate uncertainty. We view the continued uncertainty over tapering as a potential negative.
Our new economic era is characterized by the supremacy of financial capital which vacuums up the productive wealth of the nation, and then uses the nation's wealth as an insurance policy to pay for its inevitable losses.
Not tapering yet won't make things much better more quickly, but they'll keep them from getting worse.
The stock and bond markets should not be the only ones rejoicing at Larry Summers's withdrawal from consideration to run the Federal Reserve. The nation's workers should, too. Janet Yellen, the remaining frontrunner for the position, is no wimp on inflation.
If this government finally wants to send a signal to Main Street that it is no longer in the embrace in the tentacles of Wall Street, there is one person who won her spurs in spirited confrontation with Wall Street's power brokers and can wear their enmity as a badge of honor.
Despite his occasionally populist rhetoric, Obama proved highly solicitous of Wall Street interests at the expense of Main Street, and under the guidance of Summers, the Bush strategy of bailing out Wall Street continued under Obama.
Even after pointing out how Occupy fell short and how a little agreed-upon focus might have prolonged the movement and allowed it to grow strong, Occupy did succeed spectacularly at their basic goal: changing the American conversation about the economy.
Looking backwards at this debacle, it's clear that Obama's economic team did not serve him well, either substantively or tactically. Summers as chair of the Fed was always going to be a lightning rod, because of his temperament, his sketchy record as president of Harvard, his close association with the deregulation that invited the financial collapse, and the high-profile consulting gigs on Wall Street that he took since leaving government in 2010. Tactically, what unfolded in August and September was bizarre. Instead of the administration vetting Summers for hidden confirmation problems, deciding that he was an acceptable risk, and Obama announcing the appointment, what we got was a slow drip of leaks that Summers was the president's first choice. But that only served to rally Summers' opposition. It would have been much more difficult for opposition within the Democratic Party to fester if Obama had simply announced his choice.
Is this what free enterprise is meant to be? I think not!
The Federal Reserve is about to announce their decision on when to begin tapering their purchases of securities at next Tuesday's FOMC meeting. Amon...
All knowledgeable D.C. types know that the TARP and Fed bailout of Wall Street banks five years ago saved us from a second Great Depression. Like most things known by knowledgeable Washington types, this is not true.
Five years ago this week, the financial system unraveled due to recklessness on Wall Street and regulatory failures in Washington. The American people...
We both took time in a deserted New York City office building on the Friday before the last, long summer holiday weekend, to discuss something that affects every professional, but puts most people to sleep!
For decades, you could always count on the Federal Reserve to pull the plug on prosperity too soon, seeing ghosts of inflation everywhere. The Fed, responsive as it was to creditors, preferred a dose of recession to any sort of price pressures, especially wage increases. That changed with the regimes of Fed chairmen Alan Greenspan and Ben Bernanke. Greenspan was willing to keep interest rates low because the banks kept getting into difficulty after bouts of speculative excess in the 1980s and '90s and needed the cheap money to rebuild their balance sheets. The ultimate such collapse occurred just five years ago this week, when the crash of Lehman Brothers revealed the rot in the entire system, and one over-leveraged domino after another fell. The Fed, after a somewhat anomalous run as the engine of recovery, seems to be reverting to type. Trouble is, the economy won't cooperate with this scenario. Inflation is nowhere to be seen, and the recovery continues to be weak.