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Wednesday, September 2, 2015

Stanley Fischer Speaks——-More Drivel From A Dangerous Academic Fool

In fact, the only impact that free money market funding has on corporate America is round-about and perverse. 
To wit, it flushes money managers into a desperate quest for yield and provides stock speculators with endless opportunities to load up their trucks with zero cost carry trades, thereby driving the stock averages to lunatic heights.
As a result of this double-whammy, the C-suites of corporate America have been turned into glorified gambling parlors. The stock option obsessed executives domiciled there are endlessly and overpoweringly presented with the opportunity to sell cheap corporate credit to yield-hungry fund managers and use the proceeds to buyback their own over-priced stock or to acquire at a hefty premium the equally over-priced stock of their competitors, suppliers and customers, or any other company that Wall Street bankers happen to be peddling.
Again, as I demonstrated last week, after 80-months of the absurd proposition that money has no natural and inherent economic cost the pettifoggers who held forth at Jackson Hole betrayed no clue whatsoever that they are aware of the obvious:
On the margin, all of the gains in business debt since 2008 has been flushed right back into Wall Street in the form of stock buybacks and debt-financed takeovers.