if your a hedge fund manager, a Wall St banker, or in the top 1% you love Bernanke's decision. If you're a American whose concerned about the future of this country or in the middle class this was a terrible move. He asked the key question after 5 years of unprecedented stimulus pumped into the economy (Wall St) "why is the FED insisting on adding $85 B a month to their problems"?
I wonder if maybe the banks are in far more trouble than anyone suspects. Or maybe it is simply stealing. I guess once the govt bankrupts all of us, and the 1% finally own everything, there will be no need for public companies and exchanges as all deals will be private placed among the 1%'ers.
unlikely from solvency perspective but from profit perspective aside from reduction of reserves down below pre lehman levels earnings will not be great going forward. mortgage business is a big cash cow and that is blowing up despite qe, NIM is on a downward trajectory as old high interest loans pay off or get refied and they can't screw savers anymore than they already have
costs are not really changing
trading businesses are way down
advisory and bond underwriting is up however but they half that business away in bonuses
regulatory and legal costs are way up
Now there's a real possibility that the US credit markets could unwind further resulting in even higher interest rates. Only way to abort that process is to reduce inflationary expectations-not elevate them. If this continues, the 'bang point' could be reached and the very thing they have tried to avoid becomes inevitable once again.