Sunday, 18 October 2009

U.S. Stock Markets Disconnected from Reality

First, this rally is mostly about the financial sector. The U.S. government decided that, no matter what the cost to the citizen, the major banks had to be saved. Bank losses were transferred to public books and unprecedented funds were showered on the banks to keep them solvent. Bank borrowing costs were reduced to near zero and, for the first time, interest was paid on reserves held at the Fed. Many of these banks were designated as ‘too big to fail,’ so they became a nearly risk-free bet.

The result: bank profits skyrocketed.
http://www.prisonplanet.com/u-s-stock-markets-disconnected-from-reality.html

[Posted at the SpookyWeather blog, October 18th, 2009.]

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