[Mavdog]

Originally Posted by alexamenos

That is interesting.

A couple of months ago the Treasury had to step in and buy these assets because nobody could price them accurately, and without exposing these assets to the market, government accountants and spokespersons estimate their price to be 8% more than they were a couple of months ago. Enron and Madoff must envy those sorts of returns.

no, your are confusing things.

the fed didn't by the assets that "nobody could price...accurately", those assets remainded on the balance sheets of these financial firms. the fed was criticized by some groups for not purchasing the various securities as paulson had mentioned doing that very thing (the phrase "reverse auction" was used), and there was much hand wringing by some about the fed paying too much for these mbs, swaps etc. so they were not bought, they are still there in the firms (unless they did so in other sales).

the fed made investments and received equity in the firms, or made loans with debenture like rights. that is what the article is referencing with the yield they state has been realized.

as for the anecdote on "enron and maldoff", as the fed's investments are in firm's whose equities are openly traded on a daily basis on the exchanges that you and I may also be using to invest with, the comparison lacks any connection to reality.

Anyway....if one prints up a few trillion dollars or so and then uses those trillions of dollars to chase certain assets, it's almost certain that the nominal value of those assets will rise.

as mentioned, the $ (which are more modest than "a few trillion" btw) were in the businesses themselves, and so far (knock on wood) there has been a sense of stability in the exchanges that has made these investments turn to the positive.

the fed's approach has been able to calm the investment market, which has led to this rise in values.

apparently the fed does have a better handle on what they are doing, and are making many good decisions, than what some people seem to believe.....

The problems occur when we start confusing the rise in paper value with an increase in the sort of wealth that might have some impact upon the quality of lives we lead.

don't know about you, but a rise in the value of the stocks I own, my mutuals, a rise in the value of my 401, are absolutley going to have an impact in my life going forward. if the values in my accounts continued to fall like they did in 07/08 over the next couple of years, meaning they would be worth about 25% (or less) of what they were at their zenith, my future "quality of life" would certainly be affected...in a very negative way mind you.

so bottom line the fed's actions have ahad a very positive and measureable affect on every single one of us who a) are employed and b) have investments.

a few atta boys! should be offered their way