Not surprising after yesterday's Dow beating, and S&P spanking, that the Fed rose to the occasion to save the US. Concluding there is further risk of economic deterioration (welcome to the planet), the Fed decided to really shake things up and try something different this time.
a) It will force member banks to divert the excess $1.6 trillion of debt they have stored on the Fed's book to pay for the creation of 3.2 million jobs.
b) It will revert the mortgage backed securities it's holding back to the banks it bought them from, even if those banks have to take a loss, to clear the slate. It will also remove all risk guarantees.
c) It will force banks to stop mortgage loan losses on their books through making them work immediately with individual borrowers to reduce loan principal and payments to a level more comparable to the current market, not the one the banks inflated with toxic assets scooping up fraudulent loans on over-valued properties.
d) It will cease current and future QE programs in order to stop cheapening the value of the dollar, and stop giving the Treasury a place to park the debt it creates, while Washington argues about how to cut the debt.
Just kidding. The Fed's going to keep rates around zero forever (or for the foreseeable future) and reinvest any proceeds of the assets it's holding into buying more of them, and keep the Treasuries it has, yet beckon Washington to find ways to cut the debt. And, since so far nothing it's done has helped the Main Street economy, it will keep right on doing it.
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