Fed Seen Extending Operation Twist and Avoiding Bond Buys

[REO 54]

......"The Fed started Operation Twist in September. Unlike with quantitative easing, the program doesn’t increase its balance sheet. Instead, the Fed sells short-term debt and uses the proceeds to buy longer-term bonds. By keeping its assets stable, the Fed can more easily “exit” from record accommodation when the time comes. "

So my question is who the heck buys the short term debt? The Fed?

"Accomodation"? What are they accomodating? Should'nt be more like accumulating
crap debt?


more smoke and sunshine at link.....http://www.bloomberg.com/news/2012-0...nd-buying.html

[REO 54]

....update...


Fed twists again, extending stimulus to weak economy.....

By Mark Felsenthal and Pedro da Costa

WASHINGTON | Wed Jun 20, 2012 12:49pm EDT

WASHINGTON (Reuters) - The Federal Reserve on Wednesday extended its monetary stimulus to a U.S. economic recovery that looks at risk of stalling, renewing its effort to depress borrowing costs by selling short-term bonds to buy longer-dated ones.

Expressing concern about strains in global financial markets emanating from Europe, the Fed said it was extending its Operation Twist program by buying $267 billion in longer-dated securities by the end of 2012. The Fed's first Twist program was set to end this month.

"This continuation of the maturity extension program should put downward pressure on longer-term interest rates and help to make broader financial conditions more accommodative," the Fed said in its post-meeting statement.

The Fed added that for the duration of the new program, it would stop reinvesting the proceeds from maturing Treasuries in its portfolio.

Richmond Fed President Jeffrey Lacker, who has dissented at every meeting this year, voted against the action, saying he opposed the extension of Twist.

The central bank retained its guidance that rates were likely to stay near zero until at least late 2014.

The Fed stuck to its characterization of the economy as "expanding moderately," but said growth in employment had slowed in recent months.

It also expressed worries about weaker consumer spending.

The U.S. economy appears to be faltering as growth in the emerging world slows and Europe sinks deeper into its political wrangling over sovereign debt. First-quarter U.S. gross domestic product was recently revised down to a 1.9 percent annual rate from 2.2 percent.

At the same time, May jobs data confirmed that a weak labor market is faltering again, with only 69,000 new jobs created and the unemployment rate rising to 8.2 percent.

Heading into the Fed's meeting this week, economists were closely divided on whether the central bank would decided more monetary stimulus was needed now.

The Fed has held overnight interest rates near zero since December 2008 and has bought $2.3 trillion in mortgage and government bonds in a further effort to help the economy.

Last year, it launched "Operation Twist," in which the central bank sold bonds with maturities of three years or less and bought $400 billion of securities with maturities of six years and longer to push longer-term interest rates lower.

Fed Vice Chair Janet Yellen earlier this month had argued further action might make sense to "insure" against downside risks given a sharp slowdown in hiring by U.S. employers and an escalating debt crisis in Europe.

However, Fed Chairman Ben Bernanke declined to tip his hand in testimony to Congress. A Reuters poll on June 8 put the chances of an extension of Operation Twist at 42.5 percent.

Even though Greek voters over the weekend supported candidates who back taking painful steps to stay in the euro currency union, Europe's debt crisis remains a threat to the global economy and many central banks are warily eyeing economic conditions.

Minutes from meetings of the Bank of Japan and Bank of England released on Wednesday suggest officials are poised to ease policy again. China cut benchmark rates on June 7, while the European Central Bank could take action at its July 5 meeting.


http://www.reuters.com/article/2012/...85I1Q020120620

[EO 11110]

trivia - operation twist, even the name, is a rehash of an operation decades ago

bernank is determined to repump real estate. it's turned the corner here - people are gobbling up the cheap stuff with the crazy low rates. a friend of mine just got a 3.9 percent 30 year on a vacation rental

[wallew]

Bernake is a FOOL.

He is being controlled by CROOKS - our politicians

TELL ME HOW THIS IS THE REST OF THE FED'S FAULT

That's like BLAMING THE COP ON THE STREET FOR CORRUPTION BY THE HEAD COP.

What a maroon

That's the ONE PROBLEM HERE IN THE USA.

WE ALWAYS NEED SOMEONE TO BLAME and when we can't figure it out, we throw a WIDE NET over everyone involved, when generally, it's one or two people, GENERALLY AT THE TOP, WHO THINK THEY ARE IMMUNE TO GETTING CAUGHT, WHO ARE AT FAULT.

If you want to 'BLAME' somebody, how about you do your research, follow down ALL the leads, and then BLAME THE RIGHT PERSON?

Nah, that makes too much sense. You would rather just throw out aspersions at an institution that does a good job at keeping us OUT OF A DEPRESSION EVERY TEN/TWENTY YEARS.

Yes, that requires that they manipulate the money supply. IF it's the only 'quiver in your kit', you use what you have.

But you don't seem to understand that now, do you?

[bemac]

^ That's the funniest **** I've read all week.

[wallew]

So YOU THINK having CROOKS (aka politicians) controlling our money supply is FUNNY?

[bemac]

So YOU THINK having CROOKS (aka politicians) controlling our money supply is FUNNY?

No, I think your post is funny. You're defending that very thing.