In this economy, stock market rallies have been few and far between. And typically after brief market rebounds, the bargain basement billionaires depart and the major stock indices go searching for new, more depressing lows.
Surprisingly, that didn’t happen yesterday, as the Dow Jones actually went up 91 points.
So what kept the rally going?
Well, according to the New York Times, it was a trillion dollars of our money …
The Fed said it would purchase an additional $750 billion worth of government-guaranteed mortgage-backed securities, on top of the $500 billion that it is currently in the process of buying. In addition, the Fed said it would buy up to $300 billion worth of longer-term Treasury securities over the next six months. That would tend to push down longer-term interest rates on loans of all types.
Wow.
Just add another trillion onto the fire, then.
All that for 91 points the Dow will shed within a week – and for “liquidity” that will revert to constipation just in time for politicians to start drumming up the next “we’ve got to do something” chorus in Washington.
Enough of this monetary Metamucil. Time to “let the chips fall.”
