Thoughts and observations for those investing on their own or contemplating doing it themselves.
If you are seeking investment help, look at the video here on my services. If you are seeking a different approach to managing your assets, you have landed at the right spot. I am a fee-only advisor registered in the State of Maryland, charge less than half the going rate for investment management, and seek to teach individuals how to manage their own assets using low-cost indexed exchange traded funds. Please call or email me if interested in further details. My website is at http://www.rwinvestmentstrategies.com. If you are new to investing, take a look at the "DIY Investor Newbie" posts here by typing "newbie" in the search box above to the left. These take you through the basics of what you need to know in getting started on doing your own investing.
Wednesday, June 20, 2012
Will the Fed "Twist"?
What is a "Twist"? It is basically trying to lower long-term rates and raise short-term rates. By manipulating the yield curve in this way, it supposedly helps the mortgage market.
But...the yield on the 10-year is at 1.65% and 30-year fixed rate mortgages are at 3.70%! How will artificially pushing rates to even lower levels make a difference?
At this point, Bernanke is exploiting the Pavlov's dog characteristic of the markets. Mention "Quantitative Easing" (or even just QE!) or "Operation Twist" and the stock market starts salivating.
Maybe I was the only one taking notes in Econ 101, but I learned there that manipulating prices leads to misallocation of resources. In the end, this ends badly - witness 2008.
Posted by Robert Wasilewski at 8:16 AM
Subscribe to: Post Comments (Atom)
It's hard to see what more the Fed can do. Maybe factors outside the Fed's control are keeping the economy in the doldrums.ReplyDelete
It appears more and more everyday that the economy is stalling so any help from the fed cannot really do much harm.ReplyDelete
Interesting view point. I think this is a global issue which needs a combined effort.ReplyDelete