It's sort of complicated - I need to be a bank investor now to hedge against all the long term damage that is being caused.
Imagine your friend came to you with an opportunity:
"I have this mortgage portfolio I think you should buy, if you put up $1,000, I will match it with $1,000. If the investment makes money, you and I will split the gain, which is expected to be $2,000+. If the investment loses money, you could lose a maximum of $150, I will assume the rest of the loss."
This is about the best possible deal for banks I can possibly think of! Anyone would be crazy not to take this deal - I wish I was being offered this deal!
Hence the huge rally yesterday.
However, you cannot create wealth by printing money. Even if you stamp "Change" and "Hope" on the bills and put a picture of Obama on it, it still won't work. Its really amazing how many intelligent, Harvard educated economists do not understand this fundamental law that has been in existence since currency was invented.
In some regards, it is difficult to predict the repercussions of this unprecedented spending. However, one thing is certain: there will be inflation and higher interest rates in the future. If you do not own a house or are considering upgrading I would do so - when inflation hits you will want to own hard assets.
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