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Nincompoops is Us – Professional Edition Fed Report

It was a busy day. The Treasury sold 3 issues, at which the indirect bid was generally strong, except for the small TIPS issue, which indirect bidders shied away from. The Primary Dealer bid on all three issues was absolutely enormous leading to huge bid/cover ratios on the shorter term stuff. That leads to the question, “What do they know?” to which I might interject, “What the hell are they thinking?”

The Fed held another Toxic Assets Live Forever (TALF) party, and this one was an even bigger dud than last month’s. The total lent was just $1.7 billion. At this rate the Fed will reach its goal of $200 billion for this much touted “lynchpin of Fed policy”, uh…. never.

Even today’s TAF auctions dropped by 10%. The banks seem to be following the dictum, “Neither borrower nor lender be.” Of course that was a comedic Shakespearean line. In this case we are witnessing the tragicomedy of the Fed trying to keep the tide from going out. Needless to say, Bernanke and company are beginning to look like inept, powerless, nincompoops.

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Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish LiquidityTrader.com, and was lead analyst for Sure Money Investor, of blessed memory. I developed David Stockman's Contra Corner for Mr. Stockman. I’ve had a wide variety of finance related jobs since 1972, including a stint on Wall Street in both sales, analytical, and trading capacities. Prior to starting the Wall Street Examiner I was a commercial real estate appraiser in Florida for 15 years. I was considered an expert in the analysis of failed properties that ended up in the hands of bank REO divisions, the FDIC, and the RTC. Remember those guys? I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. I'm not some Ivory Tower academic, Wall Street guy. My perspective comes from having my boots on the ground and in the trenches, as a real estate broker, mortgage broker, trader, account rep, and analyst. I've watched most of the games these Wall Street wiseguys play from right up close. I know the drill from my 55 years of paying attention. And I'm happy to share that experience with you, right here. 

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