This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Hey Fed, I Have a Bridge to Sell You

NEW YORK ( TheStreet Ratings) -- The Federal Reserve Board's announcement that interest rates will stay near zero and quantitative easing will continue for the foreseeable future should not have come as a surprise to anyone. The surprise would be if the latest round of mortgage security purchases were any more successful in jump-starting the U.S. economy than the prior rounds.

As the country's central bank, the Federal Reserve should be loaning money at very low rates directly to municipal taxing authorities for the building of roads, bridges, libraries and schools. It makes no sense to encourage the over-supply of housing when the road and bridge infrastructure between those homes is crumbling.

Unlike purchasing mortgage securities, originating new municipal debt will directly create good paying construction jobs. This works better to achieve the Fed's statutory mandate of maximum employment than keeping interest rates low for companies, flush with cash, that don't want or need to borrow until customer led demand for their products returns.

This move would not be popular with the banks such as Wells Fargo (WFC - Get Report), Citibank (C - Get Report), JPMorgan Chase (JPM - Get Report), State Street (STT - Get Report), and U.S. Bank (USB - Get Report) which are among the largest originators of municipal debt.

Fed-haters, who see government as the enemy, and Tea Partiers, with no interest in expanding the economy if it means government-created jobs, would join the banks in opposing this plan. Proving them wrong is another good reason to give this a try.

-- Opinion of Kevin Baker in Palm Beach Gardens, Fla.

Kevin Baker became the senior financial analyst for TheStreet Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering equity and mutual fund ratings. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
C $54.50 -1.05%
JPM $66.80 -0.79%
STT $76.63 0.01%
WFC $56.25 -0.34%
USB $43.47 -0.30%

Markets

DOW 17,776.91 +93.33 0.53%
S&P 500 2,081.34 +12.58 0.61%
NASDAQ 4,997.4590 +5.5190 0.11%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs