Guest Post: Alert: QE II Has Lit the Fuse

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Thu, 11/11/2010 - 15:33 | 720040 Ragnarok
Thu, 11/11/2010 - 15:38 | 720066 HarryWanger
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That story is dated 11/10. 

Thu, 11/11/2010 - 15:42 | 720079 SheepDog-One
SheepDog-One's picture

My God, it was from YESTERDAY? Cant have that! Means the story is irrelevant, 'old news' or something. BTW hows that ramp job doing? Looks kinda weak to me. They better get the DOW about 100 points green or else the day is a big loss.

Thu, 11/11/2010 - 16:13 | 720186 HarryWanger
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In FX world that story might as well be 3 years old. Look at the EUR in real time right now. That's the point, junior.

Thu, 11/11/2010 - 16:40 | 720259 SheepDog-One
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Hey Harry hows that ramp to green goin? In FX world real-time I mean of course.

 

 

 

Thu, 11/11/2010 - 17:09 | 720340 Oracle of Kypseli
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Let me jump the line here.

If by law the fed and or treasury are not allowed to hand money to private companies, a defacto creative hand over, must be against the law also and be prosecutable. If any attorneys here, please weigh in. 

Thu, 11/11/2010 - 17:18 | 720368 Shameful
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Good luck getting standing.  Supremes have already ruled that the individual taxpayer has no standing when it comes how tax money is spent in his name.  Was a challenge a while ago to the way CIA was handling it's books illegally, US v. Richardson IIRC.  Trust me you won't get justice against Leviathan in the courts, the courts are vastly in favor of the Fed Gov.

Thu, 11/11/2010 - 20:19 | 720761 minus dog
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Yeah, expecting actual fair and equal enforcement of the law actually requires, you know, the rule of law.  Who'd have thunk it, eh.

Thu, 11/11/2010 - 18:04 | 720448 doolittlegeorge
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TARP was illegal.  Period.  This has been acknowledged as such in public by none other than Paul Volcker himself.  Needless to say "he wasn't expecting to be arrested, either."  What do we have here?  "It's not illegal if the government does it."  Period.

Thu, 11/11/2010 - 19:37 | 720653 robertocarlos
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Nixon was a good President.

Thu, 11/11/2010 - 18:50 | 720548 Rasna
Rasna's picture

Sheep...

Don't pay any attention...

Harry drifts in and out when the prevailing wind blows in his direction...

It's not worth it.

Thu, 11/11/2010 - 17:08 | 720343 High Plains Drifter
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Green shoots?

Thu, 11/11/2010 - 21:02 | 720466 RECISION
RECISION's picture

By the time you are getting lectured by Greece on monetary actions it might be time for a bit of self-reflection.

:-)

They are both democracies, right...

Thu, 11/11/2010 - 21:01 | 720479 RECISION
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<delete>

Thu, 11/11/2010 - 15:54 | 720119 Rusty Shorts
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LMAO

Thu, 11/11/2010 - 19:17 | 720610 Winterland
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God, you're a douche.

Thu, 11/11/2010 - 16:20 | 720210 masterinchancery
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Or...efforts to separate Germans from large quantities of euros...fail

Fri, 11/12/2010 - 11:00 | 721854 Imminent Crucible
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"Either the Fed's efforts work or they don't. Let's hope for success."

Is he kidding?  The Fed's efforts are designed to transfer a $900 billion inflation tax to consumers while paying the banks to front-run the Fed's Treasury purchases.

Let's hope they go down like the Hindenburg.  Maybe then the bankers will swing from lamp posts.

Thu, 11/11/2010 - 15:37 | 720060 Sudden Debt
Sudden Debt's picture

He who lies once...

If QE2 doesn't do the trick. QE3 and QE4 might or at least QE5 will trigger a financial poopoo mess.

Thu, 11/11/2010 - 15:48 | 720095 A Nanny Moose
A Nanny Moose's picture

Fool me once, shame on you. Fool me twice....oh nevermind.

Thu, 11/11/2010 - 15:59 | 720139 trav7777
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Fool me once, shame on....you....fool me twice...this sucker could go down

Thu, 11/11/2010 - 18:08 | 720457 FoolMeTwice
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Some woke me from dead :)

Thu, 11/11/2010 - 16:12 | 720179 Chris Jusset
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Or, perhaps, QE1 through QE8 are merely preludes to QE9, QE10, and QE11, in which case we should just trust Banana Ben's long-term perspective, and delegate more power to him.  Beginning in 2006, Banana Ben had promised that the Fed's monetary policies would not create any bubbles ... and we should trust Ben in this regard. 

Thu, 11/11/2010 - 15:39 | 720067 Hearst
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Girard Gibbs LLB Investigates J.P. Morgan, HSBC For Violations of Antitrust Laws in Silver FUtures Trading.

 

http://www.marketwatch.com/story/girard-gibbs-llp-investigates-jp-morgan-hsbc-for-violations-of-antitrust-laws-in-silver-futures-trading-2010-11-11?reflink=MW_news_stmp

Thu, 11/11/2010 - 16:50 | 720295 -1Delta
-1Delta's picture

ANYONE KNOW WHAT IS GOING ON IN MUNI LAND

 

PCQ MUB- Cali going under???

Thu, 11/11/2010 - 15:39 | 720071 the not so migh...
the not so mighty maximiza's picture

nice!!!

Thu, 11/11/2010 - 15:39 | 720072 Fraud-Esq
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Remember, while this fake Blackrock Deficit Commission rolls out their findings....that shareholders in major industries will not give up anti-trust exemptions and will continue to set prices for Medicare...

The Fed would have NEVER, under any circumstance, monetized debt to feed Americans who were starving to death and dying for lack of food. They will chuck them at private christian and religious charity, as usual. "Feed them!"

The Fed did, however, monetize debt to bail out the TOP of the pyramid, the top .0005%, of which, don't forget, at least, 30% are not American citizens per se. Int'l capital is not American, America is just the current capital, as was London, before it. The capital is where the strongest Navy and military is located, never a value judgment. BTW, that's why nuclear weapons won't due. You need the strongest conventional forces.

Keep that in mind while they monetize...   

Thu, 11/11/2010 - 15:41 | 720074 financeguru500
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How about the alternative,

Other countries throughout the world continue to experience troubles similar to greece & iceland while the U.S. maintains its current level of prosperity. We keep printing and borrowing but everything continues on. I think this is a very real possibility.

Thu, 11/11/2010 - 16:12 | 720180 Vampyroteuthis ...
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As much as I hate to admit, the printing will keep us afloat while other sovereigns are sunk. It is the race to the bottom (or hell) and we have the biggest submarine. It is amoral to the core.

In the end, countries like China are going to be forced to sell UST. It is much easier to default on our own citizens. No international incidences to deal with.

Thu, 11/11/2010 - 17:22 | 720382 LowProfile
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Not sure about your reasoning here.

Assuming all fiat goes to zero (global repudiation), then we are left with barter, and I'm not sure the USA has the best barter position.

So really it comes down to "whadda want for that?" and "whatcha got?".

ME has oil.  America has food and some heavy machinery production.  Russia has all of that, but not quite as developed.  Europe has some food, and nice factories.  Japan has nice factories.  SA has food and some oil.  China has a lot of cheap shit factories.

Basically, I want to be anybody but China.

Now, I'm not thinking for a minute we won't come up with some medium of exchange, but it eventually comes to "what are you getting for your XXX and what can you then exchange your XXX for?"

Thu, 11/11/2010 - 18:07 | 720455 doolittlegeorge
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we do set up nicely for barter in the USA actually.  The problem of course is "we bailed out the banks."  They won't allow it to work where it really can.  Nice thought, though.

Thu, 11/11/2010 - 22:47 | 721054 Nikki
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China has more than just cheap shit factories. They have 100% of the factories that make stuff that moves electrons...

Thu, 11/11/2010 - 22:11 | 720988 Calmyourself
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How is this a real possibility?  Are we on some fiatsco island where the world does not matter anymore?  Oil, rare earths, missile launches off Cali, Bueller, Bueller...

Thu, 11/11/2010 - 15:44 | 720075 Cognitive Dissonance
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In particular, concerned minds are looking for answers to questions about what might happen next and how to insulate oneself from monetary madness.  These questions are explored in detail in Part 2 of this article (free executive summary, enrollment required to access).

What a tease. He's just getting to the climax and bang, pay up sucker. However, in this case, it will money well spent. :>)

On another note, this is a wonderful example of how deep and encompassing denial, bargaining and false hope seeking is for the average Joe, not Chris. Even though Chris as been warning this would come for years, even he admits it's very difficult to accept. And while he has prepared for it financially, it's still emotionally difficult.

Imagine how difficult it will be for those who don't know what's coming.

Thu, 11/11/2010 - 15:44 | 720084 SheepDog-One
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I guess the first point didnt stick very well...many more 'airplane contrails' soon to be seen across our skies.

Thu, 11/11/2010 - 15:51 | 720110 cougar_w
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That's what the Hopi Indians claimed.

Notice that they've already skipped. Crafty bastards.

Thu, 11/11/2010 - 16:22 | 720218 xenophobe51
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Where did the Hopi Tribe go? Last time I was in Arizona they were just doin' their thing over in the four corners area.

Thu, 11/11/2010 - 15:55 | 720122 HarryWanger
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"Money well spent"? Hardly. Martenson has been singing the same tune for years. I kinda think you can figure our "part 2" on your own.

Thu, 11/11/2010 - 16:26 | 720229 InconvenientCou...
InconvenientCounterParty's picture

Prudence can have a pretty wide time envelope. Balancing complex factors in a way that places appropriate action and allocation of resources is very tough given all the spun and inverted information out there. If you are responsible for the lives of others, a large dose of prudence will definitely help you sleep at night.

Thu, 11/11/2010 - 16:04 | 720160 Raging Debate
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When I realized this is a balance sheet recession and what caused it in 2007, I spent the entire summer getting the emotional outbursts out of my system.

Fri, 11/12/2010 - 03:12 | 721464 Bob Sponge
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I still get them, but better to get it out of your system.

Thu, 11/11/2010 - 16:07 | 720164 Assetman
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Agreed with the teasing part.  And given where the dollar is heading, it may well be money well spent.

At some point in the process, the Fed lost all confidence in foreign buyers to take up the slack and guarantee a low yield for the Treasury-- but it's of the Fed's own doing.

At one time, I would have expected to the Fed to come in an engineer an correction in the risk trade, as doing so would likely attract flight of quality capital from throughout the world.  It appears their desire to artifically inflate risk assets and give the appearance of 'recovery' trumped any alternatives that would have hinted of austerity.  And the reasoning likely is... that the banks still can't afford to take auterity, maybe ever.

It's too bad, too, because now the Fed has little alternative but to monetize debt-- as the rest of the world (well ones with a credit balance) decides to take their marbles and play elsewhere.  Instead of seeing a more logical cycle of deflation/reflation to set things back into equilibrium-- the Fed appears to be embracing the reflate Govt/reflated banks approach.

What's the real problem here?  It's that a constant cycle of reflation will create massive imbalances in asset prices and invite hyperinflation.  The Fed essentially would need to rely on "self-austerity" measures by the government and by the banks to get things back into balance.  The former is a likely "no" at least in the near term.   And the banks are a 'hell no' as its reliant upon massive bonuses to keep the fat cats happy.  I can't see foreign capital coming back for a long time under this backdrop.

What I do see is a period of denial of the masses... a realization... and then, revolution.

Thu, 11/11/2010 - 18:17 | 720484 Eternal Student
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That's a pretty good summary. I'd take issue with the assumption that the big banks are going to make it out of this. I'd also take issue with the "revolution" part, if by that you mean a successful violent revolution. But other than that, yes, an excellent summary.

Thu, 11/11/2010 - 18:52 | 720550 Assetman
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Thanks for the kind comments, ES.

I do agree with you that the final result on the Big Banks will result in Major Fail.   In the meantime, you have a Federal Reserve that is doing all it can to pull the big banks out of insolvency.  Problem is, they are also trying to bail out Big Goverment as well-- in BOTH instances, by printing money.

On the revolution part, it will start out peaceful-- and may remain that way for some time.  My hope is that we get to the stage of realization before the 2012 elections, as replacing the corrupt with people more reform minded may help quell the masses.   The process of equilizing these growing imbalances, though, will be painful and invite civil unrest.

Thu, 11/11/2010 - 20:27 | 720778 minus dog
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People are already quietly putting up with all sorts of shit that, in the past, would have started some heads rolling.   I don't know if that means people will put up with anything, or if they'll get tired of it that much sooner.

Thu, 11/11/2010 - 22:19 | 721004 Calmyourself
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Now there is something I have been waiting for, why?  Supposedly other sovereigns and hedgies etc. been buying our debt and essentially taking up the slack?  Why is the Fed now taking up the slack has the rubicon been passed and there is no further offshore demand for our debt or is there some strategic reason for this and right now?  Newbie question probably but is there any data to support complete foreign dropoff?

Thu, 11/11/2010 - 19:06 | 720580 Agent P
Agent P's picture

"What a tease. He's just getting to the climax and bang, pay up sucker."

No different than getting to the back room and finding out the stripper is also a hooker...looks are free, but touching will cost you.

I'm going to do here what I do there...keep my money, go home, and rub one out.

Thu, 11/11/2010 - 20:36 | 720798 Bolweevil
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One of his first recommendations is to get settled emotionally about disruptions.  I was egotistically resistant until my Ah ha moment.  Chris helped.

Thu, 11/11/2010 - 15:43 | 720078 apberusdisvet
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How do you say "we are so fucked" in Chinese?

Thu, 11/11/2010 - 15:46 | 720087 Azannoth
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????? http://translate.google.com/#en|zh-CN|you%20are%20soo%20fucked

Do NOT follow this link or you will be banned from the site!