Operation Twist and Shout: Fed Launches Stealth Attack On Pensions
September 22, 2011
As predicted, the Federal Reserve has decided to foist QE 3 on America, but instead of naming it after its dismal failure siblings, the non-government agency is calling it “Operation Twist,” which is basically twisting the bond yield curve by snatching up longer dated bonds.
The Fed will purchase $400 billion of Treasuries with maturities between 6 and 30 years before the end of June 2012 and will sell the same amount with maturities of 3 years or less.
“This is an agreement to continue QE2 in a low-grade way,” Tad Rivelle, chief investment officer for fixed income at TCW, told CNN.
Not surprisingly – because the financial elite always tell us stuff way in advance – this represents nothing short of an under-handed attack on pension funds.
“There’s a stealth attack on and I think it’s going to be very bad news for many pension funds,” said Bengt Saelensminde of MoneyWeek. “This is going to hit our pension fund industry hard. Frankly, it’s the last thing the industry needs. I’d go as far as to say that this could be the straw that breaks the camel’s back for many of our already struggling funds.”