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As Ben Bernanke burns the midnight oil at the Federal Reserve he could do worse than fit in a couple of games of Jenga. This game involves the creation of a tower using wooden blocks, each piece of which must be carefully removed from the structure without triggering the collapse of the whole. The cessation of $40 billion of monthly asset purchases from the agency mortgage-backed securitization market will require similar dexterity if it is not to trigger the collapse of the entire market – the primary conduit through which the Fed has conducted its engineering of interest rates since the financial crisis began.
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