"The thought that should be on every investor’s mind today is
“Why did the Fed have to stage the coordinated intervention
yesterday?’
Put another way, what exactly does the Fed
know that we don’t?
The whole thing smells fishy to me. Aside from the fact that
the Fed clearly leaked its intentions as early as Monday night (hence the reason
stocks rallied while credit markets weakened), there’s something peculiar about
the fact the Fed chose to do this at the end of November.
Why November 31? Why not today or Tuesday?
I think the answer is that the Fed stepped in to help its
institutional investor/ hedge fund buddies. November was a horrible month for
this crowd. And with Bank of America approaching $5 per share (a level which
would require many institutions to liquidate due to regulations), the Fed was
also helping out its favorite insolvent bank as well.
Aside from this, Europe was approaching the End Game.
Germany won’t permit the ECB to print nor to issue Euro-bonds. The EFSF
plan was dead before arrival, failing to even stage a 3 billion Euro bond
auction without having to step in and buy the bonds itself. And the IMF wasn’t
going to be an option either.
Put another way, ALL other bailout options had failed for
Europe. The Fed was the lender/ intervener of last resort. That
alone should have everyone worried as it indicates just how dire things had
become in Europe.
However, there’s something far more worrisome about the Fed’s
move which is that: IT SOLVES NOTHING..."
