Zero Hedge on the Fed, the taper, and what they might do next:
That the Fed has a problem is increasingly well known – despite the blather from the mainstream media that QE monetization can continue ad infinitum. Their problem, of course, is running out of government-provided liabilities to monetize (as deficits shrink and their ownership of the entire Treasury complex surges). They face other problems (as we have noted before) but the admission that they are boxed in would have major ramifications in the market’s faith. So, how does the Fed, faced with the knowledge that they have created asset bubbles, broken the bond market, and are boxed in by their own excess still meet the market’s undying desire to keep the flow going? Bill Dudley just, perhaps inadvertently, dropped a hint of the next ‘market/scapegoat’ for monetization - Student loans. ….
Simply put, they are cornered and need to Taper; no matter how bad the macro data and we are sure ‘trends’ and longer-term horizons will come to their rescue in defending the prime dealers’ clear agreement that it is time…
So they need a scapegoat!
- *DUDLEY SEES `VERY RAPID RISE IN STUDENT LOAN DEBT’
Yes – Mr. Dudley – Very Very Rapid indeed…
As we recently noted, student and car loans are responsible for 99% of all consumer credit created this year.
Read the whole thing. That $1 trillion in student loan debt is out their ripe for the Fed’s picking, er, monetizing, securitizing, or whatever they call it these days.