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Atlantic Capital Management Explains Why QE2 Is A Hail Mary Throw Toward The Wrong Endzone
Atlantic Capital Management, whose previous analysis on why the US Economy is caught in another perfect storm (link) was spot on, presents its latest special report focusing on the "desperate" Fed, and why it believes QE2 "Is a hail mary toward the wrong endzone." The must read report, has three parts explaining why spending is about sources, not cost, the differential between wealth and the Chinese imbalance, and the last part emphasizes the Bernanke put, i.e., how there is no longer real risk in the decision-making process. For those who enjoy flipping to the last page of a book, here is the conclusion: "QE 2.0 moves us further in the wrong direction. It removes even more market enforcement in favor of political hocus pocus, “nobody loses” nonsense. To return to sustainability and longterm growth, discipline must be enforced on everyone, including the Fed...As to the consequences of QE 2.0, we believe this new monetary amplifier will produce exactly the wrong responses for the reasons contained within this report. It’s as if Chairman Bernanke has lined up in the wrong direction, ready to heave one to the wrong endzone. The only question is whether the rest of his teammates will tackle him before the damage is done, and the game lost."
Must read.
QE 2.0 Is A Hail Mary Toward the Wrong Endzone (pdf)
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Please don't use football analogies when speaking about bernanke. Badminton is more apropos.
Thanks for the visual. However, I think shuffleboard aboard a powerless cruiseship is more accurate.
As long as he is wearing lily-white garb and sporting a perfect manicure I'm fine with that.
Actually: spin the bottle
Fortunately, or unfortunatly (depending on your predeliction), it always lands on Barney.
How about in his lily whites, in the endzone waiting to swat at the longbomb with his banminton racket, while the defensive backs home in on him
More like speed chess in the most putrefacient pidgeon infested park of games amongst cantankerous has beens and never beens - nobody cares about them anymore except those that think they can learn from their mysterious stock of antiquated wisdom.
...i'm thinking of a pole vault...where the pole is manufactured in china and will snap in half on lift-off...with a landing in quicksand...more of an x-game type thing.
Priceless. Thanks for the laugh, as also all the sport analogies above.
ORI
"It removes even more market enforcement in favor of political hocus pocus, “nobody loses” nonsense."
Well how about this goddamn piece of news
http://www.huffingtonpost.com/2010/11/17/fcic-delays-report-angelides-po...
Takes time to bury a zombie, the darn thing keeps clawing its way back to the surface!
Joe Weisenthal - "Why I was 100% wrong about gold" - http://www.businessinsider.com/why-i-was-100-wrong-on-gold-2010-11
Umm...
Joe "the weasel" justifying his abject delusion.
.
How do you say, in that corner, TAKE trillions in bailouts, eased accounting standards and anything we can muster.
In the other corner, we need to enforce discipline.
It's impossible. Tie the people's hands behind their backs and let the banks go to work.
You cannot say "new rules" when you've advantaged the other side. That's exactly what the ABA is doing and attacking QE2 while NOT ATTACKING or seeking unwind of QE1, bailouts and backstops is not just hypocritical, it's counterproductive to ALL NON-BANKS. One-sided discipline is part of the "asset seizure policy" of banks. They love it. They don't make things. They take things.
You either UNWIND the prior favors or you assist non-banks too. QE2 is a crude attempt at that. There are other ways I'd prefer, but Congress will not go for it. I'd prefer to unwind the original bailout. But - seeing that NO ONE is calling for that, clamping down on people AFTERWARDS is the killer of the chess game. Order of action makes an enormous difference.
All calls to enforce discipline ONE-WAY after providing a long term immunity-from-discipline for banks will create worse outcomes.
Does the Ben Bernank get the Truxton Spangler treatment, finding a cloverlead soon in his mail?
All QE2 will accomplish is further dollar debasement and lucrative contracts for those politically connected.
Attention article submitters: if referring to the Federal Reserve Chairman, please address him as "the Ben Bernack."
Thank you for your cooperation.
Somewhere on another thread, someone made a really pertinent observation that QE2 was the size it was, and timed as it was to support (float) the GM IPO, one last shagadag at pulling in OPM (Other People's Money).
Made sense. GM being massively bailed out (again) and mayeb a few other entities that will need to have big "war"-chests.
And that's what it's all about!
ORI
http://aadivaahan.wordpress.com
More QE2 bashing? Well, you are all going to have to learn the hard way: Don't fight the Fed!!!
I know a guy who was saying exactly what you're now saying, back in 2007.
He had absolute faith in The Ben Bernank. Ben Bernank would never let the equity market crash. Ben Bernank would never let housing crash (and Bernank saw no bubble, according to his own words before Congress in '07). Ben Bernank would do whatever it took. Ben Bernank was as good as Greenspan with his put...blah, blah, blah.
Poor sunabitch is busted now.
Some other things which should not be fought because it is inconvenient:
Burglary
Rape
Murder
Yeah Leo.
The Fed has one hell of a success story alright. Assuming the destruction of the country is its goal, then don't fight the Fed.
And moving onto buying dippy Chinese solars....
I read this whole piece, and what is astounding is that there is a high degree of consistency emerging on whether QE2 is going to 'help'. The discussion of the quality of wealth is a good one - so much of the housing bubble wealth is still sloshing around, and the workers are still in the bubble. Take for example the supreme employment irony: former mortgage brokers turned into collections agents. I posted this fact a long while ago, but in the context of quality, they are still profiting from the housing bubble - first in its creation, and now in its (supposed) cleanup. Here we are, several years on, and nothing has improved. The government is trying to solve it through their own employment and spending levels, the Fed through QE and suddenly, business activity is falling off the cliff again. What's next?
I am suddenly not hopeful at all and the last time I felt this way, we were three months away from the Bear collapse. That puts us into February for something not pretty...
That means you have two months to party! :)
Chug another glass of Rohypnol Leo...