Sorry for the lack of blog entries this past week. I spent Monday and Tuesday at a board meeting for the Women's Funding Network and spent the rest of the week trying to catch up! I really don't have much to say about the election results, except that it is going to be tough going in Washington. There are so many problems that need tough, thoughtful analysis and decision making and I doubt much will get done over the next few years. More in my realm of expertise has been the action by the FED to expand their balance sheet by another trillion. The Wall Street Journal has been doing some excellent writing on this including Wednesday's oped "High Rollers at the Fed." They say "this is a monetary mistake" which will have fiscal risks. The Fed's balance sheet is more than $2.3 trillion, including $1.1 trillion of mortgage backed securities. When you add in what is held by Fannie and Freddie is is mind blowing. The good news ( ha ha ) is of course that the FED has earned $76 billion by driving down interest rates, but the bad news is that there is no exit strategy. If mortgage rates were to rise 100 bps from 4% to 5% it is estimated they would love $162 billion. Honestly, I cannot even wrap my mind around this. It is unprecedented and I think extremely dangerous for our economy. For a detailed analysis Bill Gross' recent commentary is a MUST READ.
Sunday, November 7, 2010
Elections, Quantitative Easing and more....
Sorry for the lack of blog entries this past week. I spent Monday and Tuesday at a board meeting for the Women's Funding Network and spent the rest of the week trying to catch up! I really don't have much to say about the election results, except that it is going to be tough going in Washington. There are so many problems that need tough, thoughtful analysis and decision making and I doubt much will get done over the next few years. More in my realm of expertise has been the action by the FED to expand their balance sheet by another trillion. The Wall Street Journal has been doing some excellent writing on this including Wednesday's oped "High Rollers at the Fed." They say "this is a monetary mistake" which will have fiscal risks. The Fed's balance sheet is more than $2.3 trillion, including $1.1 trillion of mortgage backed securities. When you add in what is held by Fannie and Freddie is is mind blowing. The good news ( ha ha ) is of course that the FED has earned $76 billion by driving down interest rates, but the bad news is that there is no exit strategy. If mortgage rates were to rise 100 bps from 4% to 5% it is estimated they would love $162 billion. Honestly, I cannot even wrap my mind around this. It is unprecedented and I think extremely dangerous for our economy. For a detailed analysis Bill Gross' recent commentary is a MUST READ.
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