QE3: The Open Checkbook (for Banks, That Is)

Nice of Uncle Bennie to take care of his friends.

...In a Dallas Fed paper released in August, OPEC chief economist William White points out that easy monetary policy favors “senior management of banks in particular.” And even Bernanke himself suggested (as if it was a good thing) that quantitative easing purchases “have been found to be associated with significant declines in the yields on both corporate bonds and MBS.” Translation: the Federal Reserve has made it artificially cheaper for corporations to borrow money and has pushed up the prices of houses (benefiting homeowners but hurting homebuyers).

Correct me if I’m wrong, but I thought cheap loans allowing businesses to leverage up and juiced housing prices were key parts of what got us into this mess?

You may know that damn near every retirement counselor has counseled that as one approaches retirement, one scales back on equities and purchases bonds instead.

So all those bondholders are now getting a miserly 0.5% (or a comparatively spectacular 1.5% for long-bonds).  That's a helluva retirement income. /sarcasm.  But the banks can borrow from the Fed at 0.5% or less, and lend at 3.75% and up.  Nice work if you can get it.

HT:   PowerLine