Here’s how former FDIC chief Sheila Bair summed it up in an interview with Reuters 2 weeks ago. Her comments were made in reference to, what she called, “The Mother of all bond bubbles”.
BAIR: “Fundamentals do not support current current Treasurys prices…This is what we saw in the housing bubble, a massive underpricing of risk. Eventually, it’s going to correct, and that’s going to create long-term problems for our kids and our country as well as short-term problems for the financial sector”
As sybil haz repeatedly stated:
Unwinding the Fed’s bulging balance sheet is not going to be easy or painfree ($3 trillion worth of bond debt) There’s a good chance that yields on USTs will skyrocket while the hobbled dollar goes into freefall. As economist Michael Hudson likes to say, “There’s no free lunch.”
This what we face when the fed triez out for the olympic dive team:
TARP, TALF, QE1, QE2, Operation Twist, QE 3, to QE monthly for "an extended period of time". Who iz this, Rodney Dangerfield with the Triple Lindee?