So I've covered the previous fraud of "stock buybacks" or "share buybacks" - but there is also the "money market" corporate bond funds...
On March 23, the Fed announced that it was creating two facilities to buy up investment grade corporate bonds along with other programs. The corporate bond facilities were called the Primary Market Corporate Credit Facility (PMCCF) and the Secondary Market Corporate Credit Facility (SMCCF). In that announcement, the Fed said that the two facilities would only be buying investment grade bonds. That was good enough news for the HYG ETF which rallied through March 30. But then HYG’s share price began to sag again along with the rest of the junk bond market. So on April 9, in a long-winded press release purporting to be taking actions to help everyday Americans, the Fed changed its Terms Sheets for both the PMCCF and the SMCCF and announced that the Fed, for the first time in its 107 year history, would be buying junk bonds.
a Blank Check!! So it's a $9 trillion bailout of big business
new podcast interview explaining the details of this FED bailout of Corporate Junk Bonds
But as the above chart indicates, just a promise from the Fed to spend billions removing toxic waste from Wall Street’s mega banks is enough to put a bid back in the junk bond market.
Here’s the skinny on how the Fed propped up both the Dow and the junk bond market with its well-timed announcements on March 23 and April 9.Dr. Jack Rasmus - in the above podcast link:
From the close on March 4 to the close on March 23, the junk bond exchange traded fund (ETF) which goes by the fancy title of “iShares iBoxx High Yield Corporate Bond ETF,” or symbol HYG, lost 21 percent of its value. But that weakness in the junk bond market did even worse damage to the Dow Jones Industrial Average. Over those same trading days, the Dow lost 8,498.93 points or a stunning 31 percent of its value in just 14 trading sessions. (See chart below.) That had apocalyptic overtones for what lie ahead for the balance of the year.
the US central bank, the Federal Reserve (Fed), is in the process of throwing trillions of dollars at the economy, most to businesses and corporations, in an historic effort to bail out the banks and now non-bank businesses as well (for the first time). The objective is to head off and prevent the deep and rapid contraction of the US economy from spawning a wave of defaults and bankruptcies among non-bank businesses that will soon fail to ‘service’ their massive accumulated debt loads run up since 2010. Broad sectors of US business heavily laden with corporate debt—corporate junk bonds, junk loans, and related debt amounting to several trillions $ in the US alone—are on the verge of failing to make principal & interest payments on that massive debt. The Fed is feeding them free money to continue to do so. As well as pumping up bank balance sheets to provide a cushion for the defaults and bankruptcies and avoid a banking-financial system crash in the event of defaults when they come. Rasmus explains how the capitalist drive to return workers to their jobs now gaining momentum is also about business revenue restoration to avoid defaults. Industries most prone to defaults: travel, oil and energy, retail, entertainment will be the leading edge. Rasmus explains the magnitude and composition of the Fed’s $9T commitment to ‘pre-bail out’ the banks and business, and how the US working class will be required to pay the bill—a present on this May Day to workers.Dr. Jack Rasmus to Wider View. Jack has a Ph.D in Political Economy and teaches economics at St. Mary's College in California.
https://jackrasmus.com/about/
Dr. Jack Rasmus playlist
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