Bernanke smacks down Romney, launches big stimulus until jobs rebound. Stocks soar.

[Nye Bevan]

The Federal Reserve launched another aggressive stimulus program on Thursday, saying it will buy $40 billion of mortgage debt per month and continue to purchase assets until the outlook for jobs improves substantially.

In a significant shift in the direction of U.S. monetary policy, the Fed has tied its unconventional bond buying directly to economic conditions, a move that is likely to be controversial among central bank critics.

"If the outlook for the labor market does not improve substantially, the committee will continue its purchase of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability," the Fed said in a statement.

http://www.reuters.com/article/2012/09/13/us-usa-fed-idUSBRE88C04T20120913

This is just what Romney was afraid would happen. Bear in mind that Romney has promised to replace Bernanke if he is elected.

Dow up 100+ points on the news.

[loudsue]

1. In the money game that is our economic structure, this is a good move, and will

be effective, no doubt, which is why republicans will be screaming bloody murder. It still should not be the case that the fed should be the kingmaker in a democracy.

Our entire system is broken.

[Bonhomme Richard]

2. He now feels safe because of Mitt debacle yesterday.

He knows now that the republicans are not going to win and now he can maneuver at will.

[JDPriestly]

7. He is buying time until the Republicans are out. I think he used to be a Republican.

I hope he has seen the light.

[JRLeft]

3. Robbedme threatened him, because Robbedme believes the stimulus will help the economy.

Robbedme told him he would select someone else if he helped boost the economy.

[bullwinkle428]

4. Rick Perry is probably yelling at an emtpy chair he's using to represent Bernanke.

[reformist2]

5. QE3 helps the stock market, and Obama, but doesn't help the economy.

Monetary policy is for the banks. The people - they need improvements in fiscal policy.

[JDPriestly]

8. It's a bandaid -- a superficial cure.

[elleng]

10. Right, but given damn Congress we're stuck with,

AND fact they'll be on 'vacation' after this week, its virtually the only 'tool' that exists.

[girl gone mad]

12. It's actually probably bad for the economy.

Simplistically, Wall Street gets more money to gamble with and they use it to drive up prices of basic goods and engage in more vulture capitalism and rent-seeking behavior.

[Egalitarian Thug]

23. Exactly. The profound ignorance of our economic system can be quite disheartening at times.

The sheeple get all excited when their quarterly statement says they have more money that they can't access, and then they get all depressed when the same paper tells them they have less of their own money that they can't access.

401(k)'s are simply a no-interest loan to Wall Street insiders that we are required to provide with no guarantee and for little to no return, and about 1/3 of us will get to retirement only to find that the money was lost in the process of making these parasites even richer.

[Myrina]

35. +100

N/t

[JoePhilly]

18. Helps my 401k.

[tk2kewl]

6. market up big

S&P
1,460.76
+24.20
+1.68%

Dow
13,542.35
+209.00
+1.57%

Nasdaq
3,162.98
+48.67
+1.56%

[elleng]

9. Dow up 197!!!

[mick063]

14. We have been coerced

To place our retirement into the stock market.

Because of that, it is relatively good news. I still have disdain for the system that puts the livelihood of our collective future in the hands of proven thieves.

If Stocks and profits are up, then where is the "Trickle down"? Why isn't the success of the wealthy "floating the boat".

I'll tell you why.

Offshore tax shelters, tax free capital gains, and unregulated hedge funds. There is no incentive to invest in the American worker.

"Trickle down" does not work because the wealthy have purchased legislation to relinquish themselves of the economic philosophy that Reagan championed. They got their money and their bailouts, but instead of distributing the wealth in the form of meaningful occupations, they purchased legislation to destroy the foundation of "trickle down" economics.

In short, the greedy bastards didn't do what Reagan promised us they would do.

[elleng]

16. Trickle down doesn't work.

It IS possible to diversify holdings, bonds, cds, other 'savings,' assuring returns tho small, like bank savings.

[mick063]

36. I get your point, but that isn't the point.

The financial institutions sold us a bill of goods. Through purchased legislation, we are collectively putting our retirement in the Stock Market. The reason we do so is that the purchased legislation provided tax "incentives" to do so.


So if you were to calculate the amount of taxes paid out when you do retire (unlike capital gains, the money is not tax free, just tax deferred) against the amount of taxes deferred when you paid in through the course of your lifetime, and you also figure in the that the thieves will wipe out much of your earnings about once per decade, one could argue that 401k is a broken system.

So you might make the argument that we could invest in other things instead. Well we could, but the supposed benefit of tax deferred savings would have to coexist with your alternatives. For example, if you had fear of low interest rates (ie. printing money = inflation), you might believe that investing in gold would be a great hedge against inflation. Show me a 401k that invests in gold. Mine doesn't. So if I choose to make a potentially wise investment in gold, I am outside the bounds of the 401k system. In other words I pay full taxes on the income to buy the gold, and I declare any income I made off the gold as income as well.

Additionally, the de facto means of saving for retirement has always been through our employers/unions and the de facto means for employers/unions to implement this is currently through 401k. This is relatively new. This conversion from traditional pension funds to 401k has happened entirely within my lifetime. In other words, the sample size to see if this truly works is much too small to declare it viable.

I'll tell you this much. There were a whole lot of people in 2008 that might tell you that the 401k system is a failure.

So we are collectively nudged along by both our employers/unions, the large financial institutions, and the Federal government to trust our life savings to a system that is unproven and has an unstable history. I'm not speaking from a personal standpoint, but from a collective standpoint. What happens when it repeatedly falls apart similar to 2008? What does it do to our nation?

This isn't by accident. We could certainly invest as we choose, but Wall Street lured America, through our government, into investing with just Wall Street. The same Wall Street that is seeing a five year high in stocks, while unemployment remains above 8%. The same Wall Street that has nearly destroyed our way of life twice within the span of 100 years. Does anyone truly believe it will all hold together or be consistently stable enough to maintain our elderly through successive generations?

It doesn't stop there. Politicians such as Newt Gingrich and George W. Bush have proposed that Social Security should be invested in the Stock Market as well. So then it is no longer a matter of personal choice. It is imposed upon us. The FICA withholding is not optional.

This is completely not by accident. This is about aligning us with them not just in money but in business practice as well. For example, If you are invested in Exxon for your retirement, you certainly would be more inclined to support unrestrained drilling by Exxon. You might be more tolerant of Exxon receiving corporate welfare. You might look the other way if Exxon were to send jobs abroad or diminish collective bargaining. People wonder why so many folks are tolerant of such things. Well.....I just explained why. Their retirement depends on Exxon success.

I'm sorry that I just picked on Exxon. I will be fair to say they are all like this. They all pour money into citizens united. They all pour money into Capitol Hill. They all purchase favorable legislation.

Wake up folks. This is all meticulously crafted. You don't care for Mitt Romney? Wall Street is full of Mitt Romneys and they are counting your retirement dollars as you read this.



Edit:

I will add to this to explain my own personal 401k plan. Yes I do own one. I take advantage of the tax deferment, but I still invest in the United States. My money goes into three month treasury bills (T-Bills). I call it the "Chinese strategy" as I read they do the same. Needless to say, I didn't take nearly the hit that most people I know in 2008. I lost about 2700 bucks for the year. Most of it from a small percentage invested in stocks. Factor that in while you celebrate the current value of stocks.

[grantcart]

38. Really? What has the Dow done since the President took the oath of office?

[Kingofalldems]

11. K and R for all the Cave visitors

Hahaha!

[WI_DEM]

13. Too bad he didn't do this six months ago then it might have had some impact on

the election. At this late date it will have little impact.

[Nuclear Unicorn]

31. 6 months ago? How about 3 years ago? We could have avoided 2010

At leaast I hope this is more than just making brokers and fund managers rich.

[Autumn]

15. Hey! The Government can create jobs!

Someone needs to tell that to the repukes.

[Egalitarian Thug]

17. Would you be so kind as to explain specifically how another multi-billion dollar welfare program

for the bond market is going to stimulate the Main Street economy?

[JoePhilly]

19. 401ks just got a nice lift.

A higher DOW impacts consumer confidence about the economy.

When the DOW crashed, that ALONE caused the average American to be scared. And that in turn had a negative effect on the economy.

This moves that sentiment in the opposite direction.

[Egalitarian Thug]

20. OK, that doesn't answer the question at all. And are you aware just how insignificant individual

410(k) plans are to the issue at hand? Essentially your 401(k) is simply floating a no interest loan to the people that robbed, and continue to rob you.

[JoePhilly]

25. Really ... ???

Wow ... I'm impressed at your ability to know how my 401k is invested.

Which clearly you have NO IDEA about.

See ... I pay very close attention to the market highs, lowes, averages, and investment alternatives.

In my 401k, I can move money into a money market account (basically cash). And then I can buy when I think the Market is low. And then, I can pull some and move it back to CASH when it jumps unexpectedly.

I could go on ... but I don't think you'd get it.

[Egalitarian Thug]

30. Really. Three economics professors and the University of California all say I know a lot

more about it than you do. If you did bother to actually learn how it works you wouldn't come back with such nonsense. You embody the real problem in America today, rampant fantasizing about the day when you are on top. "I've got mine, fuck you",

And you still haven't answered the question, so I"ll ask again, " exactly how does another multi-billion dollar welfare program for the bond market stimulate the Main Street economy"?

[JoePhilly]

39. So you are telling me to ignore the actual change in my own networth.

Interesting.

It is true that stupid people should never invest in the stock market. That does not mean that no one should.

And my approach is not "I got mine, FU" ... I was a lower middle class kid, great grades, found a way to pay for college, and am now successful ... but I also know that I was fortunate in doing so. Many are never able to navigate the system to do what I have done.

And so, when you accuse me of caring only about myself, that says more about you than it does about me.

The question back to you is how helping people stay in their homes is nothing more than "another multi-billion dollar welfare program" ...

You sound like Romney ... let the housing market collapse .... then sort it out.

[Egalitarian Thug]

40. No. Apparently you have a reading problem, or maybe it is a deficiency in extrapolation, or empathy,

either way, I couldn't care less. Your accounts are up today, great. Go get it and do something with it. Oh wait, you can't.

You are captive in a casino with a specific time constraint. You have to keep playing until you have to stop, the choice is not yours. What happens when your time is up and the market is down? Ask the millions and millions of 60 - 70-somethings that had the bad luck to have their time expire during the Clinton crash, or the two Bush crashes. Do you imagine all those gray-haired men and women working around you are doing it because they are bored and just want to get out of the house? You are advocating a system that fails about a third of the players, but the house always wins.

And you still have not answered the question.

[JoePhilly]

41. You clearly have no idea what you are talking about.

Any SMART investor in a 401k knows how to move money into one of the CASH choices.

Every time the market goes UP, I move more money to CASH.

When it drops below relevant averages, I take that CASH, and slowly buy back in.

Which part of that do you not get?

You do NOT invest in a 402k, and then ignore how it is invested, you manage it.

And I do agree, some people are unequipped to manage these things. But that is not a reason to prevent them either.

Which is what you seem to advocate.

[Egalitarian Thug]

42. Yup, you got yours, keep spinning tiny dancer. And what was the answer to that question? n/t

[Greybnk48]

21. I'll say! Woot!

Damn thing hasn't budged in months.

[JoePhilly]

26. I'd take some gains, and increase my cash holding some ...

I would not cash out ... but I would use this as an opportunity to take some gains that can be used the next time the market comes down, which it will.

[cthulu2016]

29. The same way Fed rate cuts have always very reliably increased GDP

Since the Fed cannot cut rates below 0% all of this stuff is to simulate the effect of rate cuts by other means, like taking existing debt off the market.

That Main Street historically benefits from Fed rate cuts is established. The only question is whether this can simulate that same effect.

We shall see.

[Egalitarian Thug]

32. Yes, and devaluing currency is the flip-side of inflation, but that is not relevant to the issue

either. You assert that "Main Street historically benefits from Fed rate cuts" but offer no argument to connect the two disparate factors, in fact you don't even provide a connective theory and that is just a cut & paste from an intro to economics text. You can show correlation, but you cannot show causation because it doesn't exist.

This is how they screw us. Look at the shiny object, it means good.

[cojoel]

34. here is the theory; don't know if I believe it

The theory (in simple terms):

The great recession was triggered by a bubble collapse in the housing market. This caused a collapse in household wealth, caused major issues in the banks which were vastly over-leveraged (borrowed money) into casino bets on the performance of "asset bundles" that often represented nothing more than indexes, so many failed, others just blew major portions of their capital reserves. This caused a complete collapse of credit, which only worsened the situation with business. With no demand, there was no cash flow, and with no credit it was hard to keep going at the current rate and people were laid off The banks were recapitalized with TARP, but pursued aggressive private recapitalization to get out from private regulation, rather than creating money into the economy through loans. What never happend in all of that was a complete removal of the bad debt from the banks in the first place.

The hope with this particular approach is now that household's have deleveraged considerably (paid off, discharged, whatever some amount of unsustainable debt), there is potential for demand. So by buying off the worthless paper, the banks will then be less restrained from lending, thus making credit available to business, who will be able to hire and make purchses, and newly employed with have income with which to make purchases and create additional demand into the economy, starting the cycle in a better direction.

Why I am not sure if I believe it.

There was a time when most banking was local, and the theory would probably hold, at least to some degree. But now, most of the banking is controlled by a few banks, and few super-regionals filling in much of the rest. I have little doubt that the bankers at these big banks, given vast new amounts of capital, are most likely to return to their casino ways rather than function as community banks extending credit to small and midsize businesses. I do not think that the existing laws and regulations in place are sufficient, and the Tea Party has prevented effective implementation of The CFB.

We clearly need to hire. Small businesses are the best engine for hiring. Somehow we need to allow them to function in this messed up banking world, until that can be fixed, who knows when.

[Egalitarian Thug]

37. Thank you. Really. Election season is probably the worst time to try to talk about this/these

issues and I appreciate you effort.

I also agree with much of your assessment. We've been conned into believing that the collapse is behind us and that "we're digging out of this hole". Contrary to popular myth, the facts are that residential real estate was, and remains, horribly overvalued. If you've noticed, they have been very effective at concealing the commercial real estate crisis and the collapse of American small businesses over the last four years There are two paths to correcting the residential real estate aspect of the crisis; much higher salaries for working people, or much lower real estate valuations. Beyond that, we have foundational flaws in our currency and banking systems. Flaws that can only be fixed with fundamental changes that nobody in the financial industry will agree to.

That's why we needed a strong and committed leader on this issue. What we got is a man that chose to follow another path that is both very risky, and doesn't address any of the faults. We have a leader and a party that have elected to slap a patch over the holes and pretend the job is done.

But again, it's crazy-time in the U.S.

[RedSpartan]

22. Dow now up 214!

[TrollBuster9090]

24. That's great, but he should have done it two years ago.

There is absolutely no danger of hyperinflation. Bernanke has been a huge disappointment. With Congress paralyzed, and Republicans blocking every attempt to rescue the economy in Washington, the FED was the only organization that could have helped the economy. Yet Bernanke did practically nothing for the last four years for fear of being called a *ghasp* 'Keynesian' by the Teabag crowd.

[CoffeeCat]

27. I think Obama will use the resources he has at his...

...disposal to fight like hell for the American people.

Congress won't work with him. Ok, what can he do? Bernanke can help.

The Republicans, Romney, the neocon warmongers that are making life a living hell for this country and for Obama--need to be put in their place.

I'm glad to see the President fighting back. He's got a front-row seat to their evil. I can only imagine what he has seen and what he knows.

[Spitfire of ATJ]

28. Increase since 9/11/12 is 285.57 as of this posting...

http://www.google.com/finance?client=ob&q=INDEXDJX JI

Close at 13,539.86 +206.51

Keep in mind that this could boost inflation and jack up prices at the pump.

Thought I'd warn ya....

[deminwi]

33. So sad that people celebrate this horrible news

Most of the retired people that I know, regular people that don't have offshore accounts or 401ks (because they didn't exist back then), have been hurting due to these low interest rate moves. These people worked their hands to the bone to provide for their families, be productive citizens, and retire......only to have our Federal Reserve take away all their interest income. Yes, this move is great for me and for many young people, but, man, does it ever kill our parents and grandparents. It's effening sad.

[cbrer]

43. The Taxpayer is on the hook for more toxic assets!

And we've reinforced the concept of socialized risk, privatized profit.

YAY team!