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9/16/12

US Economy: In a crummy economy, why are stocks soaring? It's Ben's money

Economic growth is pitiful. Unemployment has topped 8 percent for an exhausting 43 months. The nation is careering toward a so-called fiscal cliff, and maybe a recession.

So why is the Dow Jones industrial average, that trusty gauge of corporate America’s strength, just 4 percent shy of an all-time record? And why are the smaller public companies measured by the Russell 2000 index almost there already?

Start with two words: Ben Bernanke.

Bernanke, the Federal Reserve chairman, this week announced unprecedented measures aimed at lifting the sagging economy — and boosting the prices of assets like stocks and houses. The market rallied all summer in anticipation of such a move.

The Fed made an open-ended promise to purchase $40 billion a month in mortgage bonds and said it will keep interest rates low through 2015, even if the economy starts to improve.

Note EU-Digest:  The above Ben Bernanke saga can best be classified as a Fata Morgana.

Read more: In a crummy economy, why are stocks soaring? It's Ben's money | The News Journal | delawareonline.com

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