Federal Unreserved

Apocalyptically insane, as one of my colleagues would say - the Federal Reserve has thrown all caution to the wind and decided to roll into the last chance saloon. In addition to buying an additional $850Bln in mortgage bonds, Bernanke's crew are also going to buy $300Bln in Treasuries.

Sure, we duly got a pop in the Treasury market today as the Fed put its foot on the quantitative easing accelerator. Equity markets also got a kick up as a result.

It is a real shame that the US is following in the misguided footsteps of the Bank of England down the quantitative easing route. The structural changes that the economy needs to right itself cannot be absorbed by monetary policy. There is an inconvenient point of view that all these bailouts are merely postponing the necessary corrections - the final reckoning may yet prove higher.

That being said, PIMCO's Bill Gross proved to be right on the money - they suggested buying what the government will buy ahead of them. I admit to regretting not following that advice to a sufficient level. On the other hand, I take some comfort from the fact that even in these turbulent times there are ways to make money - one of which is simply not to watch the ghastly and naive CNBC.