Market Savior? Stocks Might Be 50% Lower Without Fed ... A report from the Federal Reserve Bank of New York suggests that the bulk of equity returns for more than a decade are due to actions by the US central bank. Theoretically, the S&P 500 would be more than 50 percent lower—at the 600 level—if the bullish price action preceding Fed announcements was excluded, the study showed. Posted on the New York Fed's web site Wednesday, the study sought out to explain AP why equities receive such a high premium over less risky assets such as bonds. What they found was that the Federal Reserve has had an outsized impact on equities relative to other asset classes. For example, the market has a tendency to rise in the 24-hour period before the release of the Fed's statement on interest rates and the economy, presumably on expectations Chairman Ben Bernanke and his predecessor, Alan Greenspan, would discuss or implement a stimulus measure to lift asset prices. – CNBC
Dominant Social Theme: Thank goodness for the Fed. O, thanks goodness.
Free-Market Analysis: One of the world's major central banking institutions has now admitted that the impact of monetary manipulation has pushed up American equity markets, the biggest in the world, by about 50 percent for at least the past ten years.
It will be instructive to see if all those who are so upset over the phony LIBOR scandal now react to this news with the same amount of indignation. Will Eliot Spitzer suggest that such manipulations constitute the scandal of the century? Will Rolling Stone take the lead in blasting this sort of market rigging? Will the British bureaucracy beat its collective breast?
What's that we hear? The sound of collective silence?