The market year of 2010 started in a edgy mode hoping to avoid complications over the uncertainty of whether the potential problems in banking and business might multiply. Because of the veiled intervention and ludicrous mark to mark values of an enormous amount of assets held on bank's balance sheets, no one knew what might happen if one great failures appeared. It became clear to the Fed there was virtually no hope in a normal recovery and that if fact the world banking system was at risk of another event which would possibly shut down normal lending functions again. Persistent high unemployment with no prospects for any recovery led the Fed to make a tactical decision to further facilitate a rise in the value of assets based on the performance of one of the few markets which were recovering appreciably, equities.
As of this post, the DJIA is 74% off its lows of March 2009 with the SP500 and NQ100, 88% and 119% respectively. Individual stocks such as AAPL are over 300% higher while Goldman Sachs has seen a gain of 385%. The Fed is not digging deep to scratch out a rally, it is hoping to further perpetuate a resilient asset class in the hopes that all will somehow benefit.
Bernanke is definitely playing poker and one might wonder why he wasted a lot money going to Harvard when anybody can learn the basics of double down on the streets. For all his great supposed knowledge of the Great Depression, endorsing social programs to build America are so yesterday. Why not take a shot and be somebody.
