One of the unintended consequences of this latest action to help Wall Street will actually hurt Wall Street. The hedge fund community will shrink considerably and with it, so will trading commissions.
I don't profess to know how long this synthetic bid will last but it will remove an integral layer of demand in the marketplace. Once the life is squeezed out of the shorts--quite literally--the risk to the downside will perhaps be greater than during any time in history.
The free market system is officially broken. The powers that be cried Uncle Sam with hopes that this initiative will allow time for it to repair itself. The underlying disease has not been cured, it's simply been (oxygen) masked. As John Bogle said in the segment preceding mine, this will take years to sort itself out.
Many on Main Street are blaming Wall Street and their angst is understandable. What isn't being discussed is the immediate gratification, consume now and pay later mindset that contributed to the structural imbalances. That's the other side of zero percent financing we've been talking about.
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