... USA [TODAY] leads with word that the Federal Reserve is considering
buying corporate bonds for the first time ever, because of the increasing
scarcity of the Treasury bonds it usually invests in. The paper reports
that the Fed might seek congressional approval to do this in two years and
if it's granted, be in the private bond market by 2005.
... The USAT lead says the Fed move into corporate paper could open the
way for the Social Security Administration, which
currently also only buys Treasury bonds, to do the same. (Now that would
be a lockbox, wouldn't it?) The story explains that the traditional fear
about such a move is that it would be a case of the Fed picking corporate
winners and losers, but it doesn't explain why this is any different from
say, when the Air Force buys a fighter from Lockheed and not from Grumman.
Also, the story says Treasury bonds are getting scarcer because "current
projections" say the national debt will be virtually retired by 2010, but
doesn't explain how this can be on the new, new, disappearing surplus
current projections. ...