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Bernanke Delivers!

Bernanke delivers on his promise not to hold back. Ben Bernanke has consistently said one of the reasons the Great Depression was so bad was that the federal government did not respond aggressively enough.

He has promised he would not make that mistake, and today he backed that up.

I noted this morning that those wishing for an aggressive Fed had three data points on their wish list: buy more mortgage backed securities (MBS), expand the TALF, and consider buying long-term Treasuries.

They are doing all three:

1) Buying long term US Treasuries by up to $300b over the next 6 months

2) Buy more MBS, up to $750 billion more, to a total of $1.25 trillion, and will also add $100 billion to its purchases of agency debt (Fannie and Freddie)

3) Will expand the TALF by expanding the range of eligible collateral

On this:

1) Stocks have rallied modestly (the Dow moved up roughly 150 points),with homebuilding stocks up double digits (mortgage rates will now certainly go into the low to mid 4 percent range immediately, creating another round of refinancings)

2) Ten-year Treasuries dropped about 40 basis points, a truly amazing drop

3) The dollar got hit,

4) Gold is rallying

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