At the Times, you never find out: Binyamin Appelbaum writes the featured report on the front page of today’s New York Times.
Plainly, this is important stuff. Including a pair of bracing headlines, here’s how the news report starts:
APPELBAUM (1/14/12): Fed Ties New Aid to Jobs Recovery in Forceful Move/Plainly, this is important stuff. This leads to today's top question:
With Shift of Policy, Officials Concede Flaws in Incremental Approach
WASHINGTON—The Federal Reserve opened a new chapter Thursday in its efforts to stimulate the economy, saying that it intends to buy large quantities of mortgage bonds, and potentially other assets, until the job market improves substantially.
What are “mortgage bonds?”
Trust us—almost nobody knows! That includes people who read to the end of Appelbaum’s report, which runs 1441 words.
What the heck are mortgage bonds? On page B4, in paragraph 25, Appelbaum finally gives the impression that he has tried to explain.
Or something. We're not quite sure:
APPELBAUM: The decision to focus on mortgage bonds reflects the Fed’s conviction that the housing market still needs help, and that lower rates on mortgage loans will produce broad economic benefits. Buying bonds drives down rates by increasing competition for the remaining bonds, forcing investors to accept a lower rate of return or move their money into other, riskier assets.From that, a careful reader could conclude that buying mortgage bonds may lower the rate on mortgage loans. How does this happen? It seems that buying (some) mortgage bonds increases competition for the remaining mortgage bonds.
This forces investors to accept a lower rate of return or move their money into other, riskier assets!
What the heck are mortgage bonds? Very few Times subscribers would know how to answer that question. And not only that:
Even if they read all the way to end, few readers will have any idea what Appelbaum is talking about. Now will they understand the lingo they hear when this topic gets rattled on cable.
We’re not calling this a bad thing. As Paul Reiser said, we’re just saying!