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Fed Members Pushing For QE 2.0
In today's release of the full September 22-23 FOMC minutes (which happened to bring the market down soundly when just the statement was released 3 weeks ago), the Fed acknowledges that several Fed members have been actively pushing for QE 2.0 already:
In their discussion of monetary policy for the period ahead, Committee members agreed that no significant changes to its policy target rate or large-scale asset purchase programs were warranted at this meeting. Although the economic outlook had improved further in recent weeks and the risks to the forecast had become more balanced, the level of economic activity was likely to be quite weak and resource utilization low. With substantial resource slack likely to persist and longer-term inflation expectations stable, the Committee anticipated that inflation would remain subdued for some time. Under these circumstances, the Committee judged that the costs of growth turning out to be weaker than anticipated could be relatively high. Accordingly, the Committee agreed that it was appropriate to maintain its target range for the federal funds rate at 0 to 1/4 percent and to reiterate its view that economic conditions were likely to warrant an exceptionally low level of the federal funds rate for an extended period. With respect to the large-scale asset purchase programs, some members thought that an increase in the maximum amount of the Committee's purchases of agency MBS could help to reduce economic slack more quickly than in the baseline outlook. Another member believed that the recent improvement in the economic outlook could warrant a reduction in the Committee's maximum purchases. However, all members were able to support an indication by the Committee of its intention at this time to purchase the full $1.25 trillion of agency MBS that it had previously established as the maximum for this program. With respect to agency debt, the Committee agreed to reiterate its intention to purchase up to $200 billion of these securities. To promote a smooth transition in markets as these programs are concluded, members decided to gradually slow the pace of both its agency MBS and agency debt purchases and to extend their completion through the end of the first quarter of 2010. The Committee agreed that it would continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. Members discussed the importance of maintaining flexibility to expand the asset purchase programs should the economic outlook deteriorate or to scale back the programs should economic and financial conditions improve more than anticipated.
As economic deterioration is merely a question of time and of stimulus exhaustion, the Stardust betting desk on if QE 2.0 will become an official policy is no longer taking bets.
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QE 2.0 -- The bond market sure ain't liking it.
"Economic Deterioration" in the mind of the Fed is when the S&P declines for two consecutive days....
no, the fricking genius's watch the DJ not the S&P?
Lizzy, my apologies for cooling off first with Anon earlier.
All The Best.
No worries, my friend!
Lizzy, you are class by example.
not a yank.. WhoT!
Makes you wonder how much of that shit they're hiding.
I'm really curious about their take on what they will eventually do with these "assets". Not what they tell us, but what they actually say to each other in confidence.
If they really try to sell them to money market funds, they're going to get pennies on the dollar.
In his recent speech about the state of the Fed's balance sheet (no doubt a proactive attempt to defuse Paul/Grayson), Benji called all those MBS "high quality" assets, and indeed they did bear such a stamp at one time. He promised to sell them off at an "appropriate time," by which I think he meant 2035 or so.
Without fed purchases of MBS there would essentially be no secondary market for American mortgages, or treasuries with maturities of more than two years for that matter. For good reason looking at underwriting "standards" being employed by various government programs. The idea that there will be some sort of transition to a "market" that does not have the fed monetizing via MBS/ABS securitization is a joke for the foreseeable future. Who but the fed would buy this trash & hold it for more than 30 days until there are real standards in mortgage underwriting even with the goodies offered under PPIP?
Quick Loan funding is now known as the Federal Reserve and Daniel Sadek grew up to be Ben Bernanke. Or, perhaps Ben Bernanke grew up to be Daniel Sadek.
+1
and the banks instead of a proper paradigm of lending money, holding the asset (and the risk) are now acting as mortgage brokers only. originate and make fees, sell to taxpayers, taxpayers eat future losses on many of the loans being originated today.
I've had it with what is going on. Really. I don't care for myself so much cuz I don't have that many years left and I'll do okay. I have 3 kids (late teens to adult) and the country they are inheriting is sad. I have stronger words but I have learned to bite my tongue. I am mad.
Thanks DH. At least I know someone is hearing what I am saying and am not living in some sort of sick vacuum. We are in the same space in life's cycle with respect to our kids. What a fourth wave, eh?
I suspect I won't be ok relying solely on my pension as a disabled veteran, hence the ability of the government to keep it wound, with no other options being all used up... However, I did volunteer.
service to this country is heroic and thank you for yours. the problem is with the civilians as you certainly know!!
the only thing i do now is not spend any of my money, so my kids will have something. and, i will NEVER stop paying my life insurance premiums.
i've had my life and I want them to have their own. with the situation in the usa now, they may need that money just to survive, know what i mean?
Just wondering. Do you think Debt Consolidation would help?
In other words, I think that there is a simple way to turn all of this around.
I just posted the full idea at Namke Business Blog. I call it the 'Namke Debt Consolidation Idea'. You can vote for or against it directly to the White House.
Webmasters : You may be interested in looking at how I do the voting straight into the White House web site. It is ethical and very simple to implement. Zero Hedge folks might enjoy using the technique. Just a guess but I would suggest that the opinions here matter at the White House.
all the best
Namke von Federlein
In almost every instance the BOE has been a tell on what is coming for the Fed. It is being used as a mechanism to float the idea (debate, disagreement) over the QE program. It is the lab through which the Fed test market attitudes apparently. It is after all the USD & the GBP that are arguably most naked when the tide goes out. Loved the headline the other day that Citi opened operations in Vietnam. JPM opening branch operations in China.
They need to open operations on the fncking moon.
Paging Ghost
Ghost is over on CR -- see his comments on the FED thread there.
Yes, BoE is trial balloon for the next phase of QE, just like the beginning of the year.
I still say watch what China says or doesn't say about QE 2.0. They were motivated to go along with QE 1.0 because of their goal of rotating into Treasuries. Watch the TIC data to see when this rotation completes.
Yeah, trying to do my job at the same time, unsuccessfully.
It is fun debating the deflationists, they just don't believe how determined Bernanke can be to be proven right about avoiding deflation.
As for QE 2, no surprise. As I have said here before, I expect MBS purchases to continue, and the S&P to hit 2000, and gold at $5000.
If/when the Fed ever stops printing money, you will have a shorting opportunity the likes of which you haven't seen since the dot-com bubble, maybe even better.
But until that time, shorting is pure suicide.
The only question is, what, if anything, will stop the money printing?
Could bond vigilantes get anywhere with Treasuries if the MBS buying continues unabated? Put a different way, can the Fed influence Treasury rates with its MBS purchases?
"Put a different way, can the Fed influence Treasury rates with its MBS purchases?"
Probably, if the foreign central banks are still willing and able to rotate out of MBS and into Treasuries.
http://www.zerohedge.com/article/foreign-central-banks-accelerate-rotati...
Dollar down. Practically every commodity up except..... wait for it.... gold.
Who's diddling with gold today?
As bond yields go up, storage cost of gold drives selling.
Hadn't thought of that. Makes sense I suppose. Is that a standard reaction?
What a surprise. My thinking now is not Dow 10K, but rather to push the economy out of the 2007-2009 depression by the NBER declaring that GDP expanded for the last two quarters of 2009. 2010-2012, well that's another story, and the media will of course drink the kool-aid spin from the Treasury.
Importantly, the current congress gets to keep their majority and hold their seats.
which is why I said 2 days ago not to count your chickens before you hatch when it was posted only 2 more POMO actions to go
FHA loans imploding
1 in 4 FHA Loans in 2007 in trouble
1 in 5 FHA Loans in 2008 in trouble
http://www.fundmymutualfund.com/2009/10/nyt-fha-problems-raising-concern...
Quotes of the day from FHA Borrower
Can they be shot for treason? Seriously?
Only when there is real representative government again.
edit
I was too fucking angry.
And maybe this is why things don't get done, we always edit ourselves.
Yes. If for no other reason than because we respect our hosts.
I Do it. A great release although I do not recommend it to anyone else.
They tell us to fuck off.
My associate, you are awake as you well know.
At least you have some cool company ...
I will be just as soon as I can after my youngest graduates in May...
Again I remind you to have a little faith in your associates and yourself. All of us have important work to do and you carry some weight with those that follow your writing. Nothing wrong with being royally pissed. You wouldn't be human if ya weren't. You are quite clever and have a trained mind. You are not edited with us MsCreant. After all, you are able to hear us better than most.
All The Best
You are sweetness itself. Glad the Internet is up so that our minds can move about on the net and give it life and sentience.
At the risk of being too corny, it just may be this collective beast that saves us.
Peace Dear Brother.
NOT corny at all!
Always. Next time tune in... for a little fun with that anger.. and try to find your way back..
http://www.youtube.com/watch?v=yVKKU6Ef5wQ (Cramerized)
http://www.youtube.com/watch?v=MYqwb7klQK8
http://www.youtube.com/watch?v=P6XrKN16cuc
http://www.youtube.com/watch?v=vyqgjCKm9nQ
And may peace be yours....
I don't need to know German to get into that. Wow.
Seems like the other drive behind the MBS program is to allow the Chinese to sell off their junk and move into Treasuries.
Members discussed the importance of maintaining flexibility to ... scale back the programs should economic and financial conditions improve more than anticipated.
With the market so peachy keen, financial conditions must be great. Let's stop the asset purchase programs now. Like the constitution says, "Congress does not control spending."
Any word if they are going to pay off on the prop bet today? TA (the stock...) is on fire, and I'm missing out by the minute. One-way transatlantic flights are overbooked.
'Committee's purchases of agency MBS could help to reduce economic slack'
These guys are kidding, right? Didn't they really mean inflate equities, increase excess reserves, bail out their bankster buddies and trash the dollar?
you have to read these statements with more care...
with careful exegesis and deconstruction you can
reform the statement as follows:
'Committee's purchases of agency MBS could help
to reduce economic slack on the balance sheets
of favored mortgage lenders'
it's all really quite simple once you know the
language....
the sheer ineptitude and stupidity within the Federal Reserve Board is simply beyond belief.
If they announce QE 2.0, i am shorting the dollar like crazy and going long silver. we will go straight to hyper inflation.
There's still ink in that press! PRINT!!! PRINT!!! PRINT!!!
There is no press, these are all ledger entries.
Awesome. So everything's cool then.
Pass me the hopium bong, man!
Thank goodness! I was worried Krugman would stay upset at the Fed for making vestages of hawkish statements. Now they can go back to happily giving eachother handjobs while whispering how great the other one is.
"Oh Fed, your printing press is so HOT when you run it at full speed"
"Oh Paul, you're so sexy when you say that the only answer to debt is more debt"
Moreover, without the mortgage note, banks cannot prove ownership and cannot foreclose. Such was the ruling today by a Massachusetts court against Wells Fargo:
http://www.businesswire.com/news/home/20091014006138/en
The inevitable conclusion as the MBS is garbage.
Position limits, commodities, and hoarding all indicate a market consensus forming that price increases / currency devaluation are on the way.
http://www.ft.com/cms/s/0/09fdd4ce-b29f-11de-b7d2-00144feab49a.html
Interest sparked in physical commoditiesBy Gregory Meyer in New York and Javier Blas in London
Published: October 6 2009 19:15 | Last updated: October 6 2009 19:15
A looming crackdown in the commodity futures markets is arousing investor interest in the real thing.
Facing a limit on holdings in paper futures contracts, bankers say they have received inquiries from pension funds and other big investors about the practicality of warehousing industrial metals or chartering supertankers.
The inquiries raise thorny issues for the US Commodity Futures Trading Commission as it devises constraints on holdings of energy futures after last year’s surge in oil prices. Gary Gensler, chairman, has said he wants position limits to be consistently applied across commodity markets.
Critics say investors could respond by bailing out of futures and hoarding actual commodities, an ugly prospect in the event of a global shortage. Neither the CFTC nor the UK Financial Services Authority has jurisdiction over spot commodity markets.
http://www.moneymorning.com/2009/10/14/physical-commodity-plays/
Hedge Funds Take Direct Stakes in Commodities … Should We Be Wary?
By Martin Hutchinson
Contributing Editor
Money Morning
ScotiaMocatta, the Canadian commodities trader and subsidiary of the Bank of Nova Scotia (NYSE: BNS), has asked regulators to approve plans for a fund that would take physical positions in copper.
Credit Suisse Group AG (NYSE ADR: CS) is working with Glencore International AG, the world’s largest trading house, on an exchange-traded fund (ETF) that will be backed by actual aluminum supplies.
And ETF Securities Ltd., a $15 billion U.K.-based firm that makes commodity-investment products available to retail investors, is offering U.S. investors gold-and-silver ETFs that are backed by the precious metals stored in vaults, instead of the more-conventional financial futures contracts.
ETF Securites is now also considering a U.S. oil fund that’s tied to swap contracts with a member of Big Oil. It already has such an arrangement with Royal Dutch Shell PLC (NYSE ADR: RDS.A, RDS.B) in Great Britain.
Hedge funds and other institutional investors that invest in commodities are beginning to demand physical delivery – and not just futures contracts, the Financial Times reported last week.
It's becoming quite disconcerting when the 'Trillion' word is being thrown around with such a nonchalent attitude. To try and put things into perspective, and assuming my math is correct, if $1,000,000,000,000 (yep that's 12 zeros) was stacked up using $10 bills, this cash mountain would weigh approximately 220 million lbs , or 110,000 tons. And to simplify it further, this is the equivalent of a fully loaded USS Nimitz class aircraft carrier (at 90,000 tons), with the additional 20,000 tons being made up of 40 Boeing 747s! It's just as well Ben and the boys manage this feat by book-entry form, otherwiswe there'd be a fairly decent sized short in ink !!
Yes, Trillion is the new Billion. Welcome to Zimbabwe.
There is no exit strategy. They will keep doing what they have been doing, in ever greater quantities, until the whole system explodes. When?
END THE FED!!!
If QE 2.0 is approved - they should all be hung by their dingle berries.
Fidel, they are only doing it to help us citizens.
there is no if....it has already been approved....
This is a little of topic but I wanted to get the Zero Hedge readers thoughts on this I watched a short documentary on Argentina’s economic collapse on you tube and the similarities just seemed more then coincidental:
Argentina’s foreign debt had become a source of impoverishment and corruption.
The policy of indebtedness gave rise in Argentina to generations of techno crates and bureaucrats who favored banks and international corporations over their own country.
Indebtedness is beneficial is what was sold to the public.
Raul Alfonsin = George W. Bush?
Carlos Saul Menum “lightning rise to power” “with his frankness and his preachers gestures” Sound familiar Barrack Hussein Obama?
This Idea of “plan austral” Accelerates the crises, stock market instability and hyperinflation?
The video mentioned a French book “In Praise of Treason” - That treason is part and parcel to politics to succeed, you have to lie.
This video put in perspective a modern economic superpower that was destroyed very rapidly. It showed the end result of this and it was very disturbing. Is this a glimpse of our fate? Can this be used as an example which many here are predicting?
Would like to hear/read some feedback/thoughts on this as this readership has some great insight
Agape!
I am seriously considering opening a retail store here in New York City, to sell Guillotine parts.
So how much QE is irreversably too much QE? is there a breaking point AT ALL? will the Fed end up owning all this garbage while the rest of the world cheers the wonderful cleanup...and does the fed actually think they would techinically be able to get away with it? Hard to know the limits of insanity these maniacs can push.
Not sure exactly how much is irreversible... but I am pretty sure that whatever number that is, it is back there somewhere in the rear view mirror.
All they can do at this point is alter when we hit bottom, not if, and I rather doubt they even have the presence of mind to effectively wield that power.
Just wait for QE 3.0!
If the squid still wants it.
BB
What are those big spiked balls on the heavy chain called? I think I want to start selling those on the internet.
This country is seeing an increase of under-educated, under-employed people with plenty of time on their hands to go gun shopping.
I wonder whether that fact keeps the Banksters and their toadies up at night? It would warm my heart to know that they might be concerned about a comeuppance.