From the Wall Street Journal:
“There’s a real question as to whether the massive bond-buying program known as quantitative easing was worth the cost, former Federal Reserve official Andrew Huszar said Tuesday. Huszar, a senior fellow at Rutgers Business School and a former managing director at Morgan Stanley, noted a few of the program’s unintended effects.
Huszar apologized for his role in QE in a Wall Street Journal op-ed published Monday.
‘I can only say: I’m sorry, America,” he wrote. “The central bank continues to spin QE as a tool for helping Main Street. But I’ve come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time.’”
It was also a back door bailout of the Blue State political machine. Quantitative Easing was intended to bail out the insolvent Blue State public pension funds which require high rates of return from Wall Street in order to pay otherwise unsustainable benefits to public union pensioners and Democrat politicians. The stock market as it now exists has absolutely nothing to do with the “real” economy of goods, services and most importantly, jobs and income.”
As most of us know, actions have consequences. The potentates of Detroit have ignored the inevitable consequences of their fiscal and moral profligacy for over forty years. Now the rest of us will pay the bill in one way another, whether through state and federal bailouts or through higher municipal and state borrowing costs. The architects of the disaster will pay no price, rather, most will collect lucrative pensions.
Emergency Manager Kevyn Orr’s plan to suspend payments on $2 billion of Detroit’s debt threatens a basic tenet of the $3.7 trillion municipal market: that states and cities will raise taxes as high as needed to avoid default . . .
“It definitely sets a precedent, and there’s definitely going to be a penalty going forward for the city and the state,” said Dan Solender, director of munis at Lord Abbett & Co. in Jersey City, New Jersey. The company oversees $19.5 billion of local debt.
“Just over half of Americans, 52%, now say they personally, or jointly with a spouse, have stock market investments. That is one percentage point below last year’s figure, making it the lowest in Gallup’s 15-year trend.”
The Gallup survey shows stock ownership by individual Americans at a 15 year low. The market is a rigged game dominated by two factors: Insider-information based instantaneous electronic trading and massive unfunded “purchases” of US Treasury bonds and Fannie Mae mortgage-backed securities by the Federal Reserve which simply prints money for the “purchases.”
A primary purpose of the Fed’s Wall Street purchases is to iflate market returns to allow the various States’ retirement system investments to meet public employee (union) pension payout obligations. The end-game won’t be pretty!