Bernanke is out of control

NEW YORK (Reuters) - American International Group, the insurer bailed out by the U.S. government in September, said on Monday it sold $39.3 billion of assets to a fund established by the Federal Reserve Bank of New York.
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The U.S. government saved AIG from bankruptcy in September with a rescue plan that has ballooned to about $152 billion so far.

Truly amazing the kind of things that can happen when fearful and incompetent people take the power.

Dec. 16 (Bloomberg) -- Treasury 30-year bond yields fell to a record low as government reports showed inflation dropped by the most on record last month and the Federal Reserve was expected to cut borrowing rates to near zero percent.

The 10-year note’s yield touched 2.465 percent, the lowest level since the beginning of the Fed’s daily data in 1962, as investors sought the highest yields of the safest government securities. The Fed also may also say it’s considering unconventional methods such as buying long-term debt to keep interest rates low.

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“It’s not about the absolute rates, it’s allocation to safety,” said Paul Horrmann, a strategist in Jersey City, New Jersey, at ICAP Plc, the world’s largest inter-dealer broker. “Treasuries may be at a premium, but that’s the cost of risk aversion.”

This guy clearly doesn't understand what he's doing...

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Fed Chairman Ben S. Bernanke said in a Dec. 1 speech the central bank would consider buying longer-term government debt to prevent yields from rising. One option, Bernanke said, is to buy “longer-term Treasury or agency securities on the open market in substantial quantities.” He said there was limited room to lower rates.
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The Treasury’s annual report yesterday showed government spending exceeded revenue by $1.01 trillion in the 12 months to Sept. 30, compared with $276 billion a year earlier, under stricter accounting methods used to calculate the shortfall.

This screams INSOLVENCY. If Helicopter Ben wants to support the Treasuries, he will sink the USD.

Dec. 16 (Bloomberg) -- The Federal Reserve may today reduce its main interest rate to the lowest level on record and prepare for one of the boldest experiments in its 94-year history: using its balance sheet as the key tool for monetary policy.

The Fed’s Open Market Committee will probably cut the benchmark rate in half, to 0.5 percent, according to the median of 84 forecasts in a Bloomberg News survey. The central bank may also signal plans to channel credit to businesses and consumers by further enlarging its $2.26 trillion of assets.

Chairman Ben S. Bernanke plans new steps to combat the credit crunch and prevent the worst recession in a quarter century from turning into a depression. The danger is the Fed’s credibility could be hurt if policy makers don’t clearly communicate a new strategy of manipulating the supply of money, at a time when FOMC members have diverging views on the subject.

Somebody, please stop him!