Clearly the WSJ is not second rate to the FT guys. This is spot on to what we have been seeing.
At its core, the Bernanke Twist is a direct effort to try and support prices; to stop destructive debt deflation. We are in uncharted territory though. The Fed is not just trying to game the market in US government debt. It’s trying to support the entire asset-backed debt market.
Which is particularly risky when the the Fed is effectively supporting those prices by positioning itself as a risk sump.
No wonder, as Krugman says, Fed officials are “nervous”. This is an all-out gamble.
Yo eleven anyone?
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