THEY demanded the Fed ''deliver''. The consequences of ''failure'' were ''dire'', they cried. Don't let us down! It was the grandest ''Daddy, I want a pony'' act in history. And this week, Fed chairman Ben Bernanke obliged the denizens of Wall Street with ''the kitchen sink'', as one pundit dubbed it.
''QE3-plus'' is the ultimate money-printing bonanza. And they had the cheek to dress it up as a boon for the jobless. In reality, the banks get to shovel their lame mortgage debts plumb into the lap of the taxpayers at the rate of $US40 billion ($38.1 billion) a month.
This time the Fed is buying, not just government bonds, but the mortgage-backed securities (MBS) that are clogging up Wall Street balance sheets.
We have a situation in which the Fed is privately owned by the banks. The banks have bought off Washington with their ''donations''. Washington, in turn, has the Fed to buy the very debts it creates.
The buying forces interest rates down, and the government's cost of borrowing, to boot. And so they expand the supply of money.
Already, the Fed's balance sheet has tripled to $US2.8 trillion in four years. Now the plan is to spend almost another half-a-trillion a year, relieving the Fed's shareholders of their debts, even at a premium. Yes, the taxpayer is likely to pay par. Should all this lead to rampant inflation, as it probably should, the value of everybody's money will fritter away.
The greater risk is to food inflation and starvation in the developing world. Corn, wheat and soybean prices have already run up hard.
Meanwhile, 40 million MacMansions lie empty, there are 46 million Americans on food stamps, and real unemployment closer to 18 per cent than 8 per cent. The last two rounds of QE stimulus failed to solve the job crisis, and now the Fed has doubled up on a losing bet, apparently while showing its hand at the same time.
What other cards does it now have to play? Surely rock bottom interest rates and a 24/7 printing press is the full deck. No matter. There's barely a murmur of discontent from Washington.
Incidentally, its all not bad for Australia, and particularly one Andrew ''Twiggy'' Forrest in the immediate short-term at least, as a bellicose debasing of paper currency tends to put a rocket under hard commodities.
TO THE far more jovial subject of Empire Oil and Gas. We have a mystery on our hands.
A search of the Empire share register showed there were 65 shareholders holding only one single share. As the shares fetch 1.3¢ these are very small shareholders indeed.
What could they possibly be doing, these 65 shareholders, apart from eking out exceptionally modest gains? Of the 65 shareholders, 33 were companies that were owned by three directors of a Sydney stockbroking firm. Messrs Luke William Cummings, Rodney Stephen Harper and Andrew Peter Salvestrin.
A spot of Googling established that the three were directors of broking firm HC Securities - no relation to the HotCopper internet forum that has withdrawn all discussion of Empire after legal action from the company. Anyway, the three prolifically small shareholders are no longer at HC Securities. In fact, they sold 85 per cent of the business in March 2009 and both the firm and one of the lads, Rod Harper, both said the transactions had nought to do with HC. So, there you have it. The shares were bought, said Rod, so that they might participate in Empire's share purchase plans (SPPs) and like offerings. If they, for instance, took up their $15,000 worth of shares in their 33 companies in last month's SPP at a 20 per cent discount, that would have made them a collective $120,000. Certainly a better day's work than the $800 forked out in company search fees to the corporate regulator.
There was also a bunch of low-value trades struck on August 14 when the SPP was announced. Elsewhere in this most acrimonious of shareholder battles - where dissidents are trying to roll the Empire board and the board is suing for defamation - the war of words continued.
On Wednesday, before
Justice Le Miere, in the Supreme Court, dissident shareholder Eddie Smith had a setback in his bid to have a requisition for shareholder meeting rendered valid. Empire had challenged the validity. The company also noted that Smith had given undertakings to the court to remove allegedly defamatory documents from his website. The Empire directors are suing him for defamation.
Meanwhile, discussion on another internet stock forum has been shut down. Readers may recall last week we revealed plans by HotCopper to leave the country on account of being harassed by lawyers too often.
Now on a smaller chat site, TopStocks, this appears on the Empire thread: ''The EGO forum has been temporarily shut down. Members will not be able to post in this forum until it is reopened. The closure is due to pending legal action which cannot be elaborated on any further''.
Shareholder democracy is the loser.
