Curve Watchers Anonymous is once again taking a look at the yield curve.
click on chart for sharper image
You can go back as far in history as you want and you cannot find a chart that resembles what the Greenspan and Bernanke have done.
Greenspan fueled the biggest property bubble in history by holding rates too low, too long. Bernanke undercut those rates to near-zero, and has held them low, for even longer.
Bernanke’s stated purpose in QE II was to hold interest rates low. He has also wants to support housing and stimulate lending.
Bernanke’s QE II Scorecard
- Long-term yields are rising
- Banks are not lending
- Consumer credit is still dropping
- Housing prices hit new all time record lows
- Housing starts have hit new all time record lows
- Banks are sitting on massive amounts of properties not marked-to market
- Commodity prices have soared
- Food and energy prices are up substantially
- Those on fixed incomes earning nothing on their deposits are getting crushed
- The stock market marches higher
Bernanke has taken credit for point number 10. He ignores or denies any role in points 1 through 9.
In case you missed it, please see Hello Ben Bernanke, Meet “Stephanie”. It’s about point number 9.
Mike “Mish” Shedlock
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