Goldman Sees "Disturbing Signs" If Government Does Not Bow Down To Krugman, Reflate Monetary And Fiscal Bubbles

Tyler Durden's picture

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Rusty_Shackleford's picture

Seems the full court press is on for QE2.0 (?3.0).

Mr Lennon Hendrix's picture

They are locked and loaded....and so am I.

Careless Whisper's picture

and just to show you they really really care, goldie will wave their fees on all those bonds that will be financing the deficit spending.

B9K9's picture

Think big, people. If QE X.0 fails to be engaged, the country is going down. (Of course, if QE succeeds in being implemented, the country still fails, but perhaps a bit further out.)

Now, by my estimate, around 50% of the citizens of this great land are just about ready for a reset, and everything that entails.

Once the meme that !QE = !USA reaches a broad audience, people just may vote in November to see & experience such an outcome.

Al Huxley's picture

Next QE will just speed up the failure - negative return on debt now.

UncleFester's picture

At least it will finally resemble reality.

Kegfreak's picture

There has to be a velocity to QE.  Every additional round of lube has to do less then the last, and if this is the case, when QE 2 and 3 ease there way in to the economy, the feeling will not be as good as the first time, and we all know that the first QE saved us from the "greatest depression since the Great depression."

Assetman's picture

If Goldman is pushing QE for public consumption, the jig is in to compress this market.  One more short squeeze and internal GS reposition, and the Fed will wait until the hapless populous is begging for more stimulus.

Of course, the machinations of buying more assets will only help the banking system, and that won't go unnoticed.  Fiscal spending is a tricky issue politically as well.

Make no mistake about this-- while the Treasury is promoting "growth policies" by issuing more debt, they are desperate to keep those new issue coupons as low as possible.  That becomes more difficult to pull of under QE 2.0 and a Europe under the 12-step austerity programme.

Gwynplaine's picture
Gwynplaine (not verified) B9K9 Jul 7, 2010 11:20 AM

So the vote in November will be in favor of free spending Democrats?  If the economy deteriorates materially from now to October, that's a big win for the opposition.  The Democrats only hope is to push through an unemployment extension and another Cash for Suckers program.   They have the votes for it, and it will be pushed through - despite the protests of savers and fiscal conservatives.

If it's successful, it's the beginning of your reset.  The Dems will be re-elected by the grateful unemployed.  They can alleviate each downturn by spending and selling debt/QE.   That will deteriorate the value of the dollar, requiring more of the same medicine at each downturn.  Historical inflation cycles took up to 10 years to complete.  This one could happen much faster.

If the unemployment bill is thwarted, the Republicans can win in November by default.  That will leave the country to float until the next big crisis.  The timeline of this second scenario is harder to predict.  


Assetman's picture

So the vote in November will be in favor of free spending Democrats? 

From what corner of the galaxy did you come up with THAT conclusion?

Regardless of what the Democrats give to the "grateful" unemployed, they are toast in November.  Sure, they will do their very best to spin a good story to get re-elected... but did you see the primary results just 6 weeks ago?  Again, this was BEFORE we saw a turn in the leading economic indicators.  There will be very few incumbents re-elected, given the course that was chosen.

The issue in November isn't if the Democrats will lose, it's how much will they lose-- and who they lose to.  I wouldn't be surprised to see a handful of 3rd party candidates actually taking Congressional seats-- especially in the western states.  But a chronic lack of alternative party organization will likely keep the D/R duopoly strongly entrenched for years to come.

Still, an unemployment bill ain't going to do squat for the Dems, I'm afraid.  If the Dems had done some real thinking and addressed the country's structural problems in the 1st stimulus package, we might be telling a different story.  I doubt it, though, because we still let Uncle Ben waste $2 trillion trying to save a banking system not worth saving. 

SDRII's picture

That should be good for a nother $25 takedown in Au. QE 2.0 appetizer: AIG plane leasing unit talking about buying more planes today just in time to boost fledgling durables per Bloomberg article today (because of course they want to leverage their cost of capital advantage)...laugh or cry

Mr Lennon Hendrix's picture

If these fools think they can play the PM market the way they always have during this capitulation, they better be careful.  I could definitely see gold making unpredictable moves to the upside while they try to game it.  The biggest mistakes are always made by those who are over confident, and GS and Co look way over confident right now.  PMs will not be bullied much longer, I know it.

Kegfreak's picture

If they could just bully them sub $1000.00, I would for once be grateful.  I'm more of a silver bug though so I will take $15 and below to totally blow my saved rounds.

Scooby Dooby Doo's picture

Obama is being schooled by the Hebrew Mafia. Do what you're told and things will run smooth for you.

Resist and every media outlet in this country will eat you alive.


Did you see a media image of Obama and Benjamin Netanyahoo today? Reassuring everyone of their chumminess?

MountainHawk's picture

NPR this morning did a piece on Isreal's economy. They were untouched by the financial crisis. They came out much stronger.

Scooby Dooby Doo's picture

A bill sponsored by Lieberman was passed in Oct 2008 and approved by a non contested silent head nod vote.

The bill gave $265 Billion to israel and an apology for causing any type of apocalyptic impression that the US would not be sending more free money in the future.

Brought to you by your friends at AIPAC.

pan-the-ist's picture

NPR is the mouthpiece of the "Hebrew Mafia."

TuesdayBen's picture

NPR is in the business of generating Leftist propaganda.

Kegfreak's picture

They have quality gardening programing, not something you find where competition is involved!

jeff montanye's picture

not when viewed from palestine, in most cases.

NOTW777's picture

obamas overtures to israel were as reassuring as his promise not to prosecute the CIA, shortly before he, prosecuted the CIA

jeff montanye's picture

details?  who, other than whistle blowers, has he prosecuted at security agencies?

RockyRacoon's picture

You'll excuse me for saying so (maybe) but you seem to be a one-trick pony.

One guess as to what that trick is.

zevulon's picture

lets face it, this is all the jews fault. rich non-jews are responsible and non greedy, all rich jews comprise all greedy influential persons out there. they control everything.

dogbreath's picture

Samizdat; 200 years together. 


What do you think?

Al Huxley's picture

Full court press for QE2 is like having a full court press on the Titanic to crank the engines after the iceberg ripped a hole in the hull.  All that will happen is we'll sink faster.

Rusty_Shackleford's picture

Check out this corpse that CNBC trotted out to sell QE2 today.

It reminded me of Weekend at Bernie's.

Al Huxley's picture

I'd really like all these guys to come back and justify their actions and recommendations when the US finally gets its credit pulled.

Sudden Debt's picture

The boilers of the Titanic where one of the first rooms to be flooded. The only thing keeping the lights on where the bateries untill they also where under water. That caused the lights to go out, but never the less, even the bateries wouldn't have taken much longuer as the powersource was already long gone.

Like now, the lights are still burning but the engines of our economie are under water already a long time ago. Long live the battery!

lawton's picture

Anything to keep those billions in bonuses rolling in...

King_of_simpletons's picture

Let's admit it. QE2.0 is going to happen. The HFTs have to stay employed. Satans minions must be paid the billion dollar bonuses.

TexasAggie's picture

I and many other members of the armed forces take umbridge with teh term "drunken sailor" or "drunken soldier", or "drunken airman." They don't spend money they don't have. They may borrow a little from their mates, but they pay it back at the next payday.

Let's use the correct terminology, "Like a drunken congress critter, because they don't know where they are, where they're going, or how to get there."


Kegfreak's picture

I prefer drunken Marine personally!  When I joined, I wanted to drink, fight, and get tattoos.  Fighting is bad apparently, no tattoos that show in a short sleeve shirt, and drinking is frowned on now.  That's why I got out.  Also, drunken airmen do not exist, they sip drinks with their pinky sticking out.

SecretGoldfish's picture

drunken paratrooper?  i can testify to that label being accurate more often than not.  there wasn't a single 'social drinker' in the company i can remember.  there was oliphant, who didn't drink a drop, and then EVERYONE else.

and i remember most guys being broke a week before payday in my platoon.

ah, good times. 

bugs_'s picture

Could Goldman be right this time?

Mr Lennon Hendrix's picture

He who convincingly does G-d's work is always right!  Duh.....

Eternal Student's picture

Not a chance. The only thing QE 2 will do is to kick the can down the road, at best.

The alternative is, to them, unthinkable. Unfortunately at this point, it is also unavoidable, QE or not. It's all just a matter of time now.


Careless Whisper's picture


wake up you fukin moron. goldman doesn't give a shit about anything but it's profits, and if it can wreck the u.s. economy while making profits on those newly issued bonds -- icing on the cake.

pan-the-ist's picture

I've said it before, the public is cold and sour on QE, so it will not happen overtly.  Even the uninformed knuckle draggers I know (AKA the Goy) know that giving more money to wall street is a bad thing. The government cannot do QE 2 in a pallitable way and keep their jobs.

Kegfreak's picture

and congress is constitutionaly bound to pass a budget.  Whats your point?  The new Iphone is fucked up, didn't you read?  Lindsay Lohan is going to jail, and we will support Isreal's bombing of Iran and "need" the money to contain those evil Persians.  QE 2?  What the hell is a couple trillion when the fate of the free world is on the line?

Pondmaster's picture

I find the Jew bashing and Gentile ( Goy?) bashing amusing on this blog . Absolutely amazing . Do you hear yourself ? Funny though , the Goy are the Head , and Jews are still the tail . To provoke to jealousy . Knuckle draggers indeed !   

nmewn's picture

Maybe, like Goldman, they think they're doing God's work ;-)

Fritz's picture

It seems like only yesterday that Goldman's in-house narcoleptic head of strategy was publishing a weekly memo promising S&P 1300.


AccreditedEYE's picture

Seriously. It's like one tentacle doesn't know what the other is doing... their reputation as master of the universe continues to get tarnished by their own. I love it.

Reese Bobby's picture

This is at least a triple switch by The Squid.  My worker bee head is spinning.  Help me Lloyd!


Serious comment...this crap will deliver a chance to get into hard assets (gold) at nice prices.  As ZH readers know...

kennard's picture

The only reason that Congress and the Executive won't do what Jan Hatzius suggests is that it is not in their short-term interests: (1) the "stimulus" will not be felt prior to the November elections, and (2) the voters are watching them. The best interests of the country are not a consideration.

Sancho Ponzi's picture

...unless the 'stimulus' winds up being a 5-10k check sent to each and every taxpayer. 

When you can no longer keep your House or Senate seat by means of graft, bribe your constituency.