The problem is that the Feds actions have served to help just a small, but powerful, constituency: Wall Street, and the firms that do the most business on it.The rising tide the Fed ushered in with hopes that it would lift all boats hasnt materialized. Now, on the verge of another round of asset purchases and other steps in order to further bring down the cost of credit, questions are being raised over just who, exactly, the Fed would help.ADVERTISEMENTAsked Thursday how he did “so well in the past 18 months,” Gross, who runs PIMCOs $252.2 billion Total Return Fund, told Bloomberg Television that in addition to a variety of other investments hes made money “from mortgages, yes, in terms of buying them in front of the Fed and selling them to the Fed over the six- to 12-month period of time.” Translation: the man who runs the worlds biggest bond fund is profiting from buying securities he knows the Fed will eventually want, and then selling them to the Fed at a premium.Meanwhile, families are being devastated by historic unemployment and record home foreclosure rates. Households and small businesses cant get credit. A quarter of homeowners with a mortgage owe more on that debt than the home is worth. Borrowers are declaring bankruptcy in near-record numbers.”In my darkest moments, I have begun to wonder if the monetary accommodation we have already engineered might even be working in the wrong places,” Richard W. Fisher, president of the Fed bank of Dallas, said last month before a gathering of economists in New York.
November 4, 2010