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Bloviating: to you, from me. Chide me if you will. algot@runeman.org

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Tue, 09 Aug 2011

Market Manipulation or Merely Market Madness?

An online article from BBC included the following information:

"People are hoping the Fed is working on a plan that will come out later today, and that, along with yesterday's sell-off, is why we're rising now," said Jeff Duncan, president of Duncan Financial Management.

Sarah Wasserman of Schaeffer's Investment Research, was also waiting for some move by the monetary authorities: "While the Fed's been noncommittal about additional monetary easing, Friday's downgrade has spurred hopes that additional assistance from the government could, perhaps, be on the horizon."

Some observers say the Fed has few weapons left.

Interest rates - at near zero since 2008 - have nowhere further to go and the bank has just completed its second round of quantitative easing, another liquidity-boosting move but one whose success is difficult to measure.

But others warned that no action by the Fed could trigger further losses: "If the Fed does nothing, it could prove to be a disappointment at this point," said one analyst at JP Morgan.

While recent months in the U.S. have seen corporate profits rise, even soar sometimes, jobs have NOT been created in the style of Regan's trickle down economics. People who can work are doing so, but many are out of work. So, how is it going to really help us if the Fed makes it easier for people to borrow money to buy and sell stocks? Is that going to make corporations suddenly see the light and begin making jobs that they have not been making during the rise of profits?