Crony Capitalism Strikes Again

David Stockman
Minyanville
March 23

David Stockman was Director of the Office of Management and Budget under President Ronald Reagan, serving from 1981 until August 1985.

Someone has to stop the Fed before it crushes what remains of America’s main street economy. Last Friday morning alone it launched two more financial sector pumping operations which will harm the real economy, even as these actions juice Wall Street’s speculative humors.

First, joining the central banking cartels’ market rigging operation in support of the yen, the Fed helped bail-out carry traders from a savage short-covering squeeze. Then, green lighting the big banks for another go-round of the dividend and share-buyback scam, it handsomely rewarded options traders who had been front-running this announcement for weeks.

Indeed, this sort of action is so blatant that the Fed might as well just look for a financial vein in the vicinity of 200 West St. [Goldman Sachs (GS) headquarters], and proceed straight-away to mainline the trading desks located there. In fact, such an action would amount to a POMO [Permanent Open Market Operations] -- so it is already doing just that!

In any event, the yen intervention certainly had nothing to do with the evident distress of the Japanese people. What happened is that one of the potent engines of the global carry-trade -- the massive use of the yen as a zero cost funding currency -- backfired violently in response to the unexpected disasters in Japan.

(More here.)

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