Ben's Big Buy And Bounce

Wall Street commentary on today's Fed announcement (for details, see my earlier note) continues to roll in—and it is almost uniformly positive.

Looking at the new programs—expanding TALF, expanding mortgage-backed securities and agency (Fannie and Freddie) purchases (by $750 billion and $100 billion, respectively), and buying long-term Treasuries ($300 billion)

Bottom line: the total buying program has expanded from $600 billion to $1.75 trillion.

Ethan Harris at Barclays had this to say: "The Fed is essentially underwriting half of the gross issuance in the MBS market and 30% of the gross issuance in the Treasury market. With the rest of Washington moving in slow motion (and in some cases hindering the revival in capital markets), the Fed continues to move ahead aggressively. We see this as equivalent to a 75bp cut in the funds rate. This underscores our belief that a combination of monetary, credit and fiscal easing will slow the recession in 2Q and spark a modest recovery by year-end."

Not everyone is delighted.

One very active trader, reviewing the Fed's actions, emailed me to say, "These guys (Bernanke) are debasing the currency and is going to cause a run on the dollar. Today's announcement is not good news."

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