Wonderful short interview with Jeremy Grantham of money management firm GMO where he basically covers his thoughts on the Fed policy and the so called Bernanke-Put that has helped to keep asset prices high. I do keep my eye out for when/if rates may turn, for when/if the VIX may hit high levels again, for when/if Gold may decide to go up through the roof once the Fed has to sell off all the assets that they have bought, and the potential highly negative impact it may have on equity prices.
In the economic crisis after World War I, there was no attempt at intervention or bailouts, and the economy came roaring back. In the S&L crisis, we liquidated the bad banks and their bad real estate bets. Property prices fell, capitalist juices started to flow, and the economy came roaring back. This time around, we did not liquidate the guys who made the bad bets.