From Financial Times:
“The stunning news that [the FED] would buy $300bn (€222bn) in Treasury bonds (and spend a lot more on many other fixed-interest securities) also used another classic military strategy. It had the element of surprise…So why did the Fed do it? The theories are out there. With the AIG bonuses moving public opinion against bail-outs, this may be the only way to pump more public money into credit. Congress will not approve such a thing. Or the Fed may know something about the banking system that others do not.”Â
“one way to interpret the Fed decision to expand its balance sheet by $1,150bn at the meeting is that it is a commitment to keep rates at near zero for a long time – possibly up to two years.”
A two year period with zero bank rates….hmmm…..opportunity, crisis or both?
