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Guest Post: QE3 - Just A Matter Of Time

Tyler Durden's picture




 

Submitted by Lance Roberts of Streettalk Advisors

QE3 - Just A Matter Of Time

QE3 - Just A Matter Of Time

The
media has been replete lately with a variety of different government
officials saying that there will not be a third round of Quantitative
Easing.  Even the great Ben Bernanke himself on April 27th spoke against
the possibility of QE 3.  This isn't surprising, of course, because in
order for something like QE to have the most effect it needs to be,
well, a surprise.

However, I am throwing down the gauntlet and making the call - there
will be Quantitative Easing, and a big one most likely, by the end of
summer.  There I said it; of course, I have actually been saying this
for the last couple of months and it doesn't take much of a real genius
to figure it out considering that we are heading into a presidential
election year.  However, it most likely won't be called QE 3 since the
term QE is now politically and socially almost taboo.

The Whitehouse Effect

So why does QE play such an important role for Obama going into an
election?   No president has ever been reelected to office when
unemployment is above 8%, much less 9%.   With the unemployed labor pool
at very high levels, poor sales being the biggest concern for small
business owners (according to the most recent NFIB survey) and wages
failing to keep up with a rising cost of living there is no incremental
demand on businesses to create new jobs.    Since small businesses have 6
applicants for every 1 job opening, are are the primary creators of 70%
of the jobs in the country, there is no pressure for wage increases.  
Without rising incremental demand from consumers, because 1 in 5 are
underwater or delinquent on their mortgage, are unemployed or on food
stamps, there is no reason for small business to expand production or
manufacturing.   While the Federal Reserve has been worried lately about
commodity price inflation - the real threat to the economy is wage
deflation as it bites into the basic economic cycle of a supply/demand
economy.

However, it isn't just the unemployed that will kill Obama at the
polls.   Without another round of QE, and most likely soon, the economy
will be headed for extremely low or potentially even negative growth.  
When round one of QE finished in the summer of 2010 the economy slid
form 3.1% annualized growth to 1.7%.    This shock to the system
immediately launched the Fed into overdrive to start QE 2.    Today we
are heading into the summer with a 1.8% annualized growth rate, likely
to be revised down a notch, and as QE 2 winds up entirely at the end of
June we are likely to see a slide to below 1%.   This will most likely
get a very late night phone call placed to Mr. Bernanke from the
Whitehouse as the average American votes psychological and emotionally. 

In the last election the average American overwhelmingly voted an
inexperienced and unproven individual with great oratory skills and
personality into the highest office in the country on the back of a
Pepsi slogan - "Hope and Change".    Unfortunately today, 70% of the
population, according to a recent Gallop poll, have lost the "Hope" part
of the equation as they still "feel" like we are in a recession or
depression.    That's right, they "feel" like things are not good which
is an emotional bias; and they will vote the same way.

Furthermore, as the economy slides, so does the stock market as
prices are adjusted to reflect what the future profitability of
companies may look like.   With the market currently expensively valued
and analysts still predicting higher profit margins in the coming months
- anything that creates stress on corporate profitability, like a
weakening economy, will cause a correction in asset prices to reflect
new estimations.    As always, the market, because it is driven by human
psychology (fear and greed) in the short term will overshoot on the
upside as well as on the downside.   Therefore, another nail in Obama's
reelection coffin will be if the stock market has declined by 20% going
into campaign mode.   Remember, it was just earlier this year during his
State of the Union address that he specifically stated that under his
watch the economy had recovered along with the stock market.   People
are emotionally affected by the value of the stock market - the "wealth
effect" is a driver of consumer behavior.   When Ben Bernanke launched
QE 2 he even added a third mandate to the Fed to include not only full
employment and price stability but also asset inflation to create a
wealth effect.   Without that wealth effect going into the polls -
voters are very likely to pull the lever for "Change".

How To Play It

Beginning back on April 25th we began writing about reducing
allocations to risk based assets (read: equities and commodities) going
into the summer months and the end of QE 2.   As shown in the chart when
QE 1 ended last year there was a fairly substantial decline in the
markets of almost 20% as the economy began to slow down.   Having only
that precedent to work off of we should remain cautious and reduce
allocations of invested dollars in all risk based categories rather than
rotate sectors.    I say this because rotating from Technology to
Utilities may provide outperformance in the portfolio - during a market
correction it will only mean that you will lose less money.   Moving
into cash and fixed income for the summer months as QE ends has yielded a
net positive return to date.

Furthermore, this strategy now sets up the individual investor for
part two of the strategy which is having dry powder available to buy
back into equity exposure when QE 3 is announced.   The market has now
been trained, like Pavlov's dogs, to respond to the QE call.    When Ben
Bernanke and friends ring the dinner bell the dogs will come running
and having cash on the sidelines protected from the summer sell off
certainly provides an opportunity to be the "strong hand" buying from
"weak hands" at that point.  

Remember, being cautious is more important than losing money.   The
media is constantly telling people to chase stocks which have been one
of the, if not the, poorest performing asset class over the last
decade.   You can always make up a lost opportunity - it is nearly
impossible to make up lost capital.

How Much And When?

So, now we know that the Whitehouse needs QE 3 the most right now but
how big might it be.   QE 1 was $1.25 Trillion coming off the lows of
the market in 2009.   QE 2 was $600 Billion in the 3rd quarter of 2010
but really had very little effect relative to the effects received from
QE 1.   I have spoken in the past about the "Diminishing Return"
syndrome that would come with each successive QE program.   In order for
QE to have any real "bang for the buck" this time around it will have
to be big, really big, like $2 Trillion in total.    However, not only
that, but it will also prove ineffective unless it is combined with a
serious attempt at mortgage equity write downs, which will have to be
combined with guarantees for the second lien holders, mortgage fraud
forgiveness for the banks, further tax cuts and credits for small
businesses and some real regulation for the banking industry to restore
faith in the stability of the financial system.    (As a side note -
I am really against bailing out homeowners and banks as it is a process
fraught with peril and another article for another day.)

This is what it will take to kick start the markets again and boost
asset prices, jolt the economy back to 2.5% growth and keep the big "O"
in office for another four years - maybe, and that is a big maybe at
this point.   It will also just "kick the can" down the street for
another brief period in time until we all realize that we are in a
balance sheet recession and until the total amount of debt, which the
majority of it belongs to households, is reduced to a sustainable level,
savings rise to historical levels which can sustain growth and the
consumer is able to start creating the incremental demand needed for
businesses to grow - we are going to be stuck in this cycle for quite a
long and frustrating time.

 

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Mon, 06/06/2011 - 19:06 | 1345029 Winston Were Wolf
Winston Were Wolf's picture

No worries though... I know the wieners story is much more important, bitchez.

Mon, 06/06/2011 - 19:31 | 1345148 NoBull1994
NoBull1994's picture

Hard to take anyone seriously who thinks White House is one word:  "Whitehouse".

Idiot.

Mon, 06/06/2011 - 20:14 | 1345292 Spalding_Smailes
Spalding_Smailes's picture

Your the moron that told me XOM Exxon Mobil Corporation was a bad buy at $59 ....

 

Mon, 06/06/2011 - 22:21 | 1345689 Tejano
Tejano's picture

'Whitehouse' works.  So does 'presidential palace' - it has a nice banana republic feel.

Tue, 06/07/2011 - 00:31 | 1345957 I am a Man I am...
I am a Man I am Forty's picture

hard to take seriously anyone who gives a fuck if there is a space between whitehouse

douche

Tue, 06/07/2011 - 04:28 | 1346144 Michael
Michael's picture

So what do we call QE3? I think the ZH community should get the honors of naming it.

My vote is for DM3(Debt Monetization 3)

Tue, 06/07/2011 - 06:43 | 1346198 wandstrasse
wandstrasse's picture

Ah, no no no, the word 'debt' is too negative, what about:

AI - Asset Internalisation

QQ - Qualitative Quantification

WR - Wealth Restructurization

Tue, 06/07/2011 - 08:38 | 1346312 YHC-FTSE
YHC-FTSE's picture

PRP: Proactive Recovery Paradigm 

or Proactive Recovery Program

Sounds just dumb enough to be convincing to stupid people who want to feel important.

(Copyright 2011. All rights reserved). I dare them to use it.

Tue, 06/07/2011 - 13:14 | 1347350 Ryman1075
Ryman1075's picture

Please give us the address for your blog, we would love to read it...

Oh? You don't have a blog? Maybe you should start one and write stories about the "White House".

Your post and my response just stole 2 minutes of my life that I will never get back...thanks man.

Mon, 06/06/2011 - 19:09 | 1345038 Yen Cross
Yen Cross's picture

  I think that Tyler and the fantastic staff of Z/H put the point in(on) the HEAD.  QE-#3 is the antimatter of QE-2  

Mon, 06/06/2011 - 20:46 | 1345377 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

QE 3 Schmuee 3, it doesn't matter at the rate the real economy is collapsing at. QE 3 will hit when it has the most impact, around the end of Sept to Oct when the market is in full crash mode.

Mon, 06/06/2011 - 22:42 | 1345743 Fukushima Sam
Fukushima Sam's picture

QE, the Fukushima of monetary policy!

Mon, 06/06/2011 - 19:06 | 1345040 kito
kito's picture

all the analysis in the world does not foretell the future.

Mon, 06/06/2011 - 19:40 | 1345171 serotonindumptruck
serotonindumptruck's picture

And if it did, the game would be even more rigged than it already is.

Tue, 06/07/2011 - 00:09 | 1345915 Whalley World
Whalley World's picture

Jim Sinclair has been saying QE to infinity for years.  His track record has been "almost"  precise since 2001

Tue, 06/07/2011 - 01:34 | 1346045 baby_BLYTHE
baby_BLYTHE's picture

same with Marc Faber

Mon, 06/06/2011 - 19:11 | 1345044 benkei54
benkei54's picture

It's not about Obama - Ben has to bail out Lloyd.  They were college buddies at Winthrop House  - Harvard Class of '75.  Check the yearbook.

Mon, 06/06/2011 - 19:32 | 1345156 LongBalls
LongBalls's picture

I would not count on the old friendship as a lock to future bets. Ben does have a Rothchild as a boss.

Mon, 06/06/2011 - 19:58 | 1345218 TheJudge2012
TheJudge2012's picture

Obama is used up & done far as I can see, and there will be a fake Republican to take his place. Can't let the dollar collapse too soon when they want war, more war, MORE WAR!!!

Mon, 06/06/2011 - 20:24 | 1345328 Manthong
Mon, 06/06/2011 - 22:50 | 1345770 tired1
tired1's picture

Is this fake gonna have nice tits?

Mon, 06/06/2011 - 19:16 | 1345052 Michael Victory
Michael Victory's picture

QEX

 

Mon, 06/06/2011 - 19:16 | 1345062 augie
augie's picture

FInally, the elephant is out of the closet. Or is it the gorilla in the kitchen?

Mon, 06/06/2011 - 19:23 | 1345097 duncecap rack
duncecap rack's picture

The bull in the china shop

Mon, 06/06/2011 - 19:37 | 1345164 augie
augie's picture

The chicken is in the pot.

Mon, 06/06/2011 - 19:42 | 1345179 serotonindumptruck
serotonindumptruck's picture

The fox is in the henhouse.

Mon, 06/06/2011 - 19:44 | 1345190 RunningMan
RunningMan's picture

Like finding a diamond in a haystack. 

Tue, 06/07/2011 - 03:59 | 1346134 mee-mee-mee
mee-mee-mee's picture

off like dads pants on pay day.

Mon, 06/06/2011 - 19:45 | 1345191 hamurobby
hamurobby's picture

The snake is in the grass.

Mon, 06/06/2011 - 19:47 | 1345210 augie
augie's picture

My balls in Bernanke's mouth...... too far?

Mon, 06/06/2011 - 19:57 | 1345236 tawdzilla
tawdzilla's picture

...And monkeys will fly out my butt.

Mon, 06/06/2011 - 19:59 | 1345244 sabra1
sabra1's picture

weiner in someones buns!

Mon, 06/06/2011 - 20:23 | 1345310 Michael Victory
Michael Victory's picture

hocus pocus.

Mon, 06/06/2011 - 21:10 | 1345490 Sokhmate
Sokhmate's picture

Abra pocus. hocus cadabra.

Tue, 06/07/2011 - 02:02 | 1346068 StychoKiller
StychoKiller's picture

Colonel Mustard in the Study (with the candlestick!)

Mon, 06/06/2011 - 22:58 | 1345787 tired1
tired1's picture

The elephant is going to take another dump. Brace yourself.

Mon, 06/06/2011 - 19:14 | 1345066 Shameful
Shameful's picture

QE3 will happen because I have yet to hear who on Earth will line up to buy 1.6 trillion in Fed Gov paper every year from here to eternity.  It's about what 3% in world GDP, and it's not like the other world govs aren't struggling right now (Name me one major not mired in problems).  Unless space aliens show up and get sucked into the ponzi I can't see any way but QE3.  Well ok there could be an honest default , restructuring, and cutting of spending...but I think the space aliens showing up is more likely.

But I'll admit I could be wrong, someone show me the deep pockets that will fund this debt with something other then funny money.  China has problems, Japan is a basket case, Europe is mired in their own problems with debt, Oil Exporters have a little revolt risk on them.  Don't think the BRICs got enough juice in them to keep blood in the US corpse even if they really wanted to.  Only thing I can see is "Caribbean Banks and Hedge Funds" aka the Fed funny money rolling this turd forward.

Mon, 06/06/2011 - 19:21 | 1345084 Medea
Medea's picture

I think we should all scrap the phrase "kicking the can" in favor of "rolling the turd."

Mon, 06/06/2011 - 19:25 | 1345115 duncecap rack
duncecap rack's picture

One of these days they are going to kick the turd and it will be a fresh, wet one.

Mon, 06/06/2011 - 19:36 | 1345159 tamboo
tamboo's picture

forget about a pot to piss in,

qe til you wont even be able to dig a hole to shit in.

Tue, 06/07/2011 - 13:16 | 1347365 Ryman1075
Ryman1075's picture

+1

Mon, 06/06/2011 - 23:38 | 1345856 dwdollar
dwdollar's picture

All money is real until it isn't.  We all use the USD in our daily activities.  It's real.  It will only become funny when everyone collectively agrees to stop using it.  The FED will buy most of the debt it issues with QE3 and the money that's created will be real because we will keep using it... for now.  The cracks are being to show and faith in the system will continue to deteoriate.  Someday the USD will be funny.

Mon, 06/06/2011 - 19:19 | 1345071 Hedgetard55
Hedgetard55's picture

Does Ben tweet?

Mon, 06/06/2011 - 19:19 | 1345072 Cdad
Cdad's picture

The "when" is truly the question...not so much the "how much" because, as the author states, it will fail anyway.  If they announced QE3 today, there would be massively negative implications for the US dollar.  The Dixie is still sitting in a precarious position, and a disorderly decline in the US dollar right here would undermine the attempt to stabilize things per the central bank planner's wildest dreams.

As such, I rather think a big bounce in the US dollar is necessary in order for them to attempt to maintain order with their pathalogical money printing schemes. [I cannot believe I wrote that sentence]

Then again, setting aside the "when" and the "how much", we're screwed anyway you slice this thing.  Sure would be nice if old Ben just faced up to the fact that the market [especially in housing] needs to clear, which means decline...and yes, the equity market would need to follow housing down.

Who knows in this freak show anymore?

 

Mon, 06/06/2011 - 19:25 | 1345128 Shameful
Shameful's picture

Decline against what?  Really all they need to do is take the Euro down a few pegs and then unleash QE so Euro goes back up and dollar goes down.  If they can sawtooth the Euro/Dollar down in a somewhat orderly fashion the indexes will look alright.  Sure commodity prices may be through the roof but they can try a couple of exchange tricks on them to at random to slap the longs around.  And with controlled indexes it's easier to spin the narrative that commodities and stuff like gold and silver are in a bubble.  Perception management at it's finest.  There is still wealth to extract, so they aren't going to leave this much wealth on the table.

Mon, 06/06/2011 - 19:53 | 1345230 Cdad
Cdad's picture

Decline against what?

Ummmm....

Really all they need to do is take the Euro down a few pegs and then unleash QE so Euro goes back up and dollar goes down.

I think that was my suggestion.  The Euro/USD is the primary "risk on/off" cross.  Others would follow, and this would put a bid into the the Dixie and move it away from its all time low...which is not far beneath where it is sitting just now.  Not far enough, anyway, to graceful receive the news that QE3 is on.

The Fed cannot risk a disorderly decline into new all time low territory on the dollar basket.  The commodities bid would resume, and the conversations about hyperinflation would resume, inflation expectations would resume.  As such, it MUST bounce.

Get ready for the totally pissed off USD studman, with his tube of lube in hand, having recently had his way with Lloyd Blankfien, now ready to move on to other classes of folk...whose portfolios are about to receive a thorough going over by risk managers.





Mon, 06/06/2011 - 19:40 | 1345174 Reese Bobby
Reese Bobby's picture

The Fed can expand its balance sheet without permission from any entity except the Banking Cartel that owns and controls them.  As ZH has pointed out before, the Fed can even use swaps/derivatives as hyper-leverage and hide it in "Other" on their B/S; just like AIG without any Goldman to margin call them into insolvency!  QE3 starts July 1, 2011 whether announced or not, IMO, (and that of many, many long-time readers).

Mon, 06/06/2011 - 20:16 | 1345289 Cdad
Cdad's picture

The Fed can expand its balance sheet without permission from any entity except the Banking Cartel that owns and controls them. 

Strictly speaking, you are correct.  However, to suggest that the Fed has zero political liabilities is not at all correct.

In any event, if the Fed does as you suggest, and does not allow the markets to function for even ONE DAY without its printing machine, that would send an incredibly weak signal to the markets and to the public at large.  I fail to see why you are confident that July 1 is the launch day.  Bernanke would look a fool and a failure [which he is...but...he's been pretty good at not announcing this fact publicly].

I don't agree with your calendar analysis.

Mon, 06/06/2011 - 20:40 | 1345360 Reese Bobby
Reese Bobby's picture

My point was/is that no outsider will be able to tell what the Fed is doing until they decide to tell us.  We all are familiar with accounting tricks.  Think about what they can do without an auditor!

 

You allude to political influence?  First of all, nobody of consequence in our corrupt federal Government is not bought and paid for by the Banking Cartel and the lawyers who serve them.  Secondly, the Fed may have Government appointed figure heads but even if that process was not corrupt, which it is, the composition of the Fed Committees that decide on the action menus report directly to the Fed owners, the Banking Cartel.  Look it up...

Mon, 06/06/2011 - 21:23 | 1345531 Cdad
Cdad's picture

Fed audits, the issue of the debt ceiling, rationalizing current monetary policy to the public...all of these things fall into the category of political risk.  The Fed requires political cooperation.  Up until now, the point is granted that they have had that.  Going forward, however, I'm not sure the carte blanche will necessarily remain intact.  

You say, "No outsider will be able to tell what the Fed is doing until they decide to tell us."  This statement is contradicted by the Fed data release of a last winter...as a result of an outsider who pressed back at the Fed with the rule of law.  It was this data release that allowed the American public to learn, among other things, that the Fed bailed out the Bank of Libya.  You are ignoring this precedent.  This historical precedent could easily be seen as a stepping stone to a Fed audit.

The status quo is a seductive thing.  This particular form of status quo is a tough nut to crack.  However, and as Ron Paul suggested, it is likely that the Fed will blow itself up before he ever gets a chance to shut it down.  This is likely true.  I think that is what is actually happening right now at the Federal Reserve.

Anyway, I am simply trying to tell you that if the Fed sends the dollar into a disorderly decline by prematurely announcing the next money printing scheme, and inflation intensifies or goes hyper, well, then the political liabilities of this Fed will become critical, the logical and last immovable object encountering the previously unstoppable force.

Whether or not you want it, I think you should prepare for the nasty, immoral USD studman to appear, bottle of lube in hand.  Whatever that means for your positioning, and no matter how improbable you might think it...I'd prepare were I you.

Mon, 06/06/2011 - 23:31 | 1345843 Reese Bobby
Reese Bobby's picture

You are naive and apparently simple; and you don't read posts you respond to.

The good news: In God's eyes that is not a negative; maybe a positive.

Tue, 06/07/2011 - 00:57 | 1345988 Cdad
Cdad's picture

and you don't read posts you respond to.

Even though I quoted you in each case and responded directly to issues expressed in your comments...your assertion is the above quote.

Ok buddy, I am "naive and apparently simple" and you are...let me guess, a Constitutional Scholar?  Rocket Scientist?  Professor of debate and rhetoric?  An artist in search of his canvas?  Ahead of your time?   A debunker...yes, that's it!  You are an amateur debunker...with a clear view through God's eyes.

Uh huh.


Mon, 06/06/2011 - 19:17 | 1345077 Robslob
Robslob's picture

Like a bunch of well trained dogs...bitch about QE then cry it is going to happen soon...

Don't automatically assume the elite want Obama in the Whitehouse...he served his purpose...now they need someone poor people trust to tell them why they are off the SNAP program and we all have to "suck it up" and Obama has already played that role.

Look for them to roll out some simple thinker that people will follow next.

Mon, 06/06/2011 - 19:51 | 1345211 serotonindumptruck
serotonindumptruck's picture

"Look for them to roll out some simple thinker that people will follow next."

Like that bitch from Alaska, or that Mormon fuck-knuckle from Utah?

Mon, 06/06/2011 - 21:08 | 1345472 topcallingtroll
topcallingtroll's picture

Anybody that will shrink the government is fine with me.

Mon, 06/06/2011 - 21:28 | 1345554 serotonindumptruck
serotonindumptruck's picture

US gubermint is dead. Better get used to it, troll.

Tue, 06/07/2011 - 01:25 | 1346032 Maniac Researcher
Maniac Researcher's picture

This is partisan hackery and has nothing to do with any kind of analytical framework.

Enjoy your Limbaugh fan page.

Mon, 06/06/2011 - 21:33 | 1345571 victor82
victor82's picture

Well, consider that Sarah is in the process of being "remastered" for wider consumption, so to speak, given how her initial rollout was so hideously fucked up by the GOP Suits.

Wouldn't have mattered. The Banksters had picked their poodle. Now their poodle has served his purpose. 

Mon, 06/06/2011 - 21:46 | 1345598 serotonindumptruck
serotonindumptruck's picture

Yeah, and it didn't help her prospects when she decided to become the surrogate mother for her slutty-assed daughter's Down Syndrome child, either.

Mon, 06/06/2011 - 19:20 | 1345078 alfred b.
alfred b.'s picture

 

  It shall come to pass....and ought to be called 'Against all Odds' !

 

 

Mon, 06/06/2011 - 19:17 | 1345083 bigwavedave
bigwavedave's picture

the future is a reduction of the consuming portion of GDP to drop from its current 70% ish to a more war like level of 50% ish. there is a war on you know! 

Mon, 06/06/2011 - 19:21 | 1345105 IdioTsincracY
IdioTsincracY's picture

That is only part of it ....

the other part is that Capital has found places with higher/easier returns on 'investment' ...

Mon, 06/06/2011 - 20:53 | 1345406 topcallingtroll
topcallingtroll's picture

My capital, and that of most people, will go to the places where it is treated well.

Why would we invest our capital in a country that just shits upon us?
Why would people invest in a place like america where the common man routinely votes for politicians who make life hard for small owners of capital?

It is not fair I have a tiny bit of capital they say! It must be redistributed and regulated heavily for the "greater good."

Tue, 06/07/2011 - 03:20 | 1346110 css1971
css1971's picture

In the UK, many people (particularly local councils) invested their capital in Icelandic banks. Boy that was a fucking HUGE mistake.

My question is wy the fuck were local councils investing millions in Iceland in the first place. It is not as if the roads are perfect, or even good, or that schools are well funded... That money should have been circulating in the council's local economy, not in Iceland's bubble economy.

My view is that capital should be put to work making the local world around you a better place to live, the more local the better. You benefit twice; from the investment, and from the facilities it creates... or indeed many times as you make use of local roads, facilities and businesses the money supports and makes possible.

Local building societies, credit unions, industrial and provident societies for example. It all sounds very socialist, but in fact it's the way capitalism should work, rather than a massive Ponzi scheme.

Question. Why should the Chinese benefit from my money?

 

Mon, 06/06/2011 - 19:18 | 1345090 IdioTsincracY
IdioTsincracY's picture

QE3 is not going to happen.

The FED would try having another round of QE only with accelerating deflation.

Mon, 06/06/2011 - 19:25 | 1345110 Spalding_Smailes
Spalding_Smailes's picture

 

only with accelerating deflation.

Bingo

 

Mon, 06/06/2011 - 19:39 | 1345169 bigwavedave
bigwavedave's picture

QE3 wont happen but monetization will continue and at an expanded level. there are still many 'monetary tools' including the newer ones that Dino Kos described. then there is the GIC fold-in which can be monetized for a year or twos worth of spend.

Mon, 06/06/2011 - 19:19 | 1345098 Convervative Co...
Convervative Connection's picture

No president has ever been reelected to office when unemployment is above 8%, much less 9%.

I'm sure FDR would take a stand on that comment. Figuratively, of course.

Mon, 06/06/2011 - 19:20 | 1345099 Yancey Ward
Yancey Ward's picture

If there is a QEIII, and I am of the opinion that the Fed will not do one willingly, then it will be called something unintelligible, and will likely be done secretly.

Mon, 06/06/2011 - 19:32 | 1345145 Reese Bobby
Reese Bobby's picture

The Fed does what the Banking Cartel tells it to do.  Where you been?

Mon, 06/06/2011 - 19:46 | 1345165 Bob
Bob's picture

Called something like the Investing In America! Monetary Program.  Elementary school kids will be piling into TYD.  Market guidance delivered with school announcements every morning, live ticker on every computer screen. 

Mon, 06/06/2011 - 19:20 | 1345103 rapier
rapier's picture

QE only tinkles down on the jobs economy so it will not be done for jobs or the GDP.  It will be done to support the Treasury market under the duress of huge borrowing needs and thus freeing up liquidity to keep financial asset markets liquified.

Not that Ben et al won't say it's for jobs but please don't dump that stool here.

Mon, 06/06/2011 - 19:24 | 1345121 owensdrillin
owensdrillin's picture

 

Obama probably isn't even sure what QE is. The clown has golfed 71 times since being elected. How many people out there holding down a job can get in 71 rounds of golf in two years.

That, my friends, is throwing it in your face. But I'm sure he is thinking about all the unemployed and destitute while he is out there toughing it out on the links.

Hard to believe in this day and age that the people (both sides) running the show are the best the US has to offer. Absolutely sickening.

 

Mon, 06/06/2011 - 19:53 | 1345214 alfred b.
alfred b.'s picture

 

  Obama still thinks that QE 11 was a ship!!!

 

 

Mon, 06/06/2011 - 20:01 | 1345255 tawdzilla
tawdzilla's picture

Full of Navy Corpse Men.

Mon, 06/06/2011 - 23:53 | 1345730 TruthInSunshine
TruthInSunshine's picture
by alfred b.
on Mon, 06/06/2011 - 19:53
#1345214

  Obama still thinks that QE 11 was a ship!!!

 

 

 

The play is never so obvious as so many believe, and hindsight is always 20/20.

For everyone thinking there will/must be more QE or QEesque programs of a similar or greater amount as in the past, the questions that even the most confident of this inevitability should be asking are whether it's even possible, and if so, whether it will hasten the implosion of what is an already mortally wounded organic economy in the United States (the 2/3rds driven by a what is now a wounded consumer base and beleaguered small and medium sized businesses).

In other words, will more QE produce disimilar consequences than past episodes (hint: yes, very much so)? Will more QE produce even more damaging consequences than past episodes (hint: yes, very much so)?

Mon, 06/06/2011 - 19:29 | 1345132 chump666
chump666's picture

It will have to be absolutely massive to make any impact for stocks...for the rest of the economy, well QE is a conjob.  But the market will need a massive one gotta be over a trillion +++.

Mon, 06/06/2011 - 19:43 | 1345175 buzzsaw99
buzzsaw99's picture

The usa president is irrelevant. QE is about funneling money to the banks. Next they will funnel money some other way, possibly asset sales. Voting is useless, the real economy doesn't matter. The only thing "they" care about is the stock market and the banksters.

 

oh yeah, NFLX down 4% bitchez!

Mon, 06/06/2011 - 19:42 | 1345193 Everybodys All ...
Everybodys All American's picture

Why not just string Bernanke up ... that alone would make me buy stocks.

Mon, 06/06/2011 - 19:46 | 1345197 Reese Bobby
Reese Bobby's picture

I was busy today.  How many times did Greece get bailed out?

Tue, 06/07/2011 - 05:29 | 1346169 nathan1234
nathan1234's picture

Not once. No money available to post bail.

Mon, 06/06/2011 - 19:45 | 1345205 steve from virginia
steve from virginia's picture

 

The question is who works for whom. Does Obama work for Bernanke?

Why would Bernanke bail out Obama's politial career? What's in it for Bernanke?

What's in it for Obama? The dude isn't doing much presidenting. He golfs a lot, flies around to different places in an airplane, gets blamed for everything.

Progressives literally hate his guts. Obama the Sellout to Wall Street.' His community organizers will stay home or work for Dennis Kucinich or some other non- Obama candidate. If the Republicans could find someone in their caucus who could walk and chew gum at the same time, they would walk away with the election.

QE stopped 'working' as intended 3 months ago. Stocks, most bonds, Treasuries have languished, dollar isn't dead; Bernanke got a bubble in PMs and crude. How does anyone think more QE is going to work? QE is Bernanke versus nature: the law of gravity. Bernanke cannot print oil, nor can he print jobs. He cannot do anything but expand the Fed balance sheet, by doing so push the Fed toward uselessness. Yes, the Fed is insolvent right now. Becoming more so accomplishes what, exactly?

QE makes fuel more expensive which rips the guts out of the American Way, the waste- based economy. We (You) are suffering from $100 oil in ways would not take place in a world with $35 oil.

 $35 oil will never be seen again unless there are $2/day American wages ... for those lucky enough to find jobs.

I will take the 'nature' bet and figure Bernanke is going to pass this time.

He has been 'Richard Whitney 2.0' riding down Wall Street buying "Steel at $105". Now is the time to sit back and allow an orderly decline.

The establishment really doesn't have much choice.

Mon, 06/06/2011 - 19:52 | 1345213 NERVEAGENTVX
NERVEAGENTVX's picture

It isn't the economy that is "sliding", it's financial markets that are sliding in order to reflect the same amount of "slip" that is already present in the economy. This is why the masses are being brainwashed into looking at the DOW as being some kind of economic barometer. After all isn't it the DOW and other associated index's that is the only thing that QE helps keep artificially elevated anyway?

Mon, 06/06/2011 - 20:01 | 1345240 Yen Cross
Yen Cross's picture

 For what it's worth.  I have only Junked one person in a (6- month time frame) .

    She deserved it!

Mon, 06/06/2011 - 20:02 | 1345243 max2205
max2205's picture

QE3 will be the purchase of big banks preferred and sr debt 2 Trillion sounds right. The XLF must not make a 2 year low. Were it is dint now at $15 ish shows what a joke the fed is and how even they couldn't push it like the XLE 50% run since last aug.

Mon, 06/06/2011 - 20:09 | 1345277 chump666
chump666's picture

Thats a valid comment.  I think we speeding towards another credit/liquidity crunch very soon.  QE3 could originate with massive repo ops.

Very good article on FT re: ECB OPen Europe committee commenting on ECB unrealized losses. Maybe ZH could find it

Personally the Central bank end game is at QE3, cause it's got to be bigger than all others.  If central banks become mega huge bad banks, the printing presses will run day and night. 

Fun times ahead

Mon, 06/06/2011 - 20:40 | 1345372 topcallingtroll
topcallingtroll's picture

I think qe3 should be a huge temporary tax reduction or tax holiday. This is the only thing republicans will allow to pass.

The tea party opposes banker bailouts and defeated or forced to retire most incumbent republicans running in 2010 who voted for the bank bailouts.

Mon, 06/06/2011 - 21:56 | 1345628 max2205
max2205's picture

+1. +dreaming

Mon, 06/06/2011 - 20:05 | 1345257 GoldVsFRNdotCOM
GoldVsFRNdotCOM's picture
QE3 is coming, but the FED spinmeisters have to coin another obfuscated bankster term so the public remains confused about their being fucked (the real inflation hasn't hit YET) by Helicopter Bennie and his printing presses.It rhymes with TARP (we all know how unpopular that scam was) and it'll take a little while longer for this fish to stink and sink the ship. They need a catchy one, How about Complete Aggregate Remuneration Proliferation? CARP for short. That'll baffle the hell out of JoeSixPack while he strikes the Al Bundy pose in oblivious fashion while the GOV-Bankster consortium lubes their fiscal protuberance for the final f'king of the public.
Mon, 06/06/2011 - 20:25 | 1345321 infinity8
infinity8's picture

it's funny I've been thinking that the marketing team is working overtime to come up with some totally different name for the next round. . . "QE" is so worn out and if you say "quantitative easing" it sounds like something that happens after a laxative. It will be either utterly garbled and confusing to J6P or something "hopeful"-sounding like it will help all good (tax paying) Americans "win the future". Oh, the theater!

Mon, 06/06/2011 - 20:27 | 1345335 Temporalist
Temporalist's picture

@ GoldVsFRNdotCOM

"QE3 is coming, but the FED spinmeisters have to coin another obfuscated bankster term so the public remains confused about their being fucked"

 

How about:

Egress Extension

Monetary Lubing

Liquidity Relieving

Access Passification

Exit Strategy

 

Tue, 06/07/2011 - 00:01 | 1345894 dwdollar
dwdollar's picture

JOBS?

Just Obfuscating Bull S****

That will surely win some votes.

 

Mon, 06/06/2011 - 20:19 | 1345299 putbuyer
putbuyer's picture

This article is fantastic. Support the adverts on ZH because this kind of info is just super. Peace brothers.

Mon, 06/06/2011 - 20:20 | 1345303 zaknick
zaknick's picture

Oh say can you see!

With the unemployed labor pool at very high levels, poor sales being the biggest concern for small business owners (according to the most recent NFIB survey) and wages failing to keep up with a rising cost of living there is no incremental demand on businesses to create new jobs.    Since small businesses have 6 applicants for every 1 job opening, are are the primary creators of 70% of the jobs in the country, there is no pressure for wage increases.   Without rising incremental demand from consumers, because 1 in 5 are underwater or delinquent on their mortgage, are unemployed or on food stamps, there is no reason for small business to expand production or manufacturing

Wake up bankster Matrix zombies! The banksters have left you shirtless (on credit!) in te continent your forefathers conquered.

KKK Bankster Empire FTW

Mon, 06/06/2011 - 20:35 | 1345357 topcallingtroll
topcallingtroll's picture

Then cut taxes on working people to increase marginal demand.

Mon, 06/06/2011 - 20:24 | 1345316 Temporalist
Temporalist's picture

Here is some interesting news.

June 6, 2011, 8:14 p.m. EDT

Goolsbee to return to Chicago University position

SYDNEY (MarketWatch) -- Austan Goolsbee, a long-time adviser to President Barack Obama and chairman of the U.S. President's Council of Economic Advisers, said Tuesday that he will return to the University of Chicago's graduate business school. Goolsbee will return to Chicago in time for the upcoming school year. No replacement was named

http://www.marketwatch.com/story/goolsbee-to-return-to-chicago-universit...

Mon, 06/06/2011 - 21:39 | 1345591 I_ate_the_crow
I_ate_the_crow's picture

Goolsbee:  "jobs report little bump on recovery path" and "one month is not a trend" and even if it is the "broader trends are substantially more positive than when Obama took office" so "don't bank too much of any one jobs report, they are highly variable" and anyways "stiff headwinds" are to blame.

His job is done, I suppose. Either he grew a conscience and resigned or they fired him for being a shitty liar that no one believes now. Time for some fresh blood that will have some credibility.....at least for a little while.

 

 

Mon, 06/06/2011 - 20:24 | 1345325 wombats
wombats's picture

Ben will print as much as it takes and Tim will spend as much as it takes to guarantee O's re-election.  Whatever they spend it will be a bargain at twice the price.

Mon, 06/06/2011 - 20:31 | 1345336 Jack Burton
Jack Burton's picture

 No amount of financial engineering like QE1-2-3 etc. can put right a broken economy that is lacking in productive enterprise. Most profits are now gained through the financial sector of the economy. QE3 is just another life line to the speculator class and the government deficit spenders.

Indeed the question is "Who will line up to buy 1.5 trillion in US treasury debt when there is no QE soaking up the treasuries"?  Who has that kind of money and if they do have it, they will need much of it to cover their own financial problems. Japan, the UK, China? Maybe Saudi Arabia can pick up some slack, but there isn't enough money in the oil prodicers to buy up all the US treasuries. It's either the Fed prints and buys treasuries, or interest rates head for the edge of the know universe. Who will buy US treasuries with a return near zero and the ability of the USA to repay the principal coming into more and more doubt.

America's days of world super power are over. When you have to print fake money to buy your own debt you can hardly be a super power. The troops will be brought home when their isn't one dime left to pay the troops or buy the weapons. America is insolvent, yet struts around the world like we had a real economy producing wealth to back our military spending.

Mon, 06/06/2011 - 21:01 | 1345436 dark pools of soros
dark pools of soros's picture

when will people wake up to the fact that America got hi-jacked and its fall will have NO AFFECT or EFFECT on the ones sucking it dry?? 

 

So many here are saying, "can't wait till it all falls down, that'll show 'em!"

 

Show who?? the blind sheep?  blind or seeing, sheep get sheared.

 

 

 

Mon, 06/06/2011 - 21:32 | 1345555 GoldVsFRNdotCOM
GoldVsFRNdotCOM's picture

They won't wakeup,  because they DO NOT CARE.  They think it's someone elses' money and the average jane has no grasp on basic economics. All they feel is a pinch @ the supermarket or beer tab.... so far.

 

You would not believe how many people I have tried to explain this to pver the last 6 years and only a handfull took my advice.

 

It is this dolt-ism and complacency that GOV malfeasence and Bankster thievery thrives on. The illiterati will never wakeup until the welfare entitlement well dries up.

Tue, 06/07/2011 - 20:14 | 1349102 dark pools of soros
dark pools of soros's picture

the best example I have to show the store of value in money these days is showing people my copy of Dying of Money.  When released in 1974 it listed for $11.95.  Back then, silver was around $4 oz.  So 3 bars get you the book.   When Silver was at $48 recently and I sold some and put some profits to work buy buying the book for $240, that was around 5 pieces of silver. Since then, at $35, it is 7 pieces.

 

So let's review. Over 37 years, the book in $$ goes up 20 times in price.  In silver it went up roughly twice the price.   

 

One funny ancedote is that the book's price is printed with an *.  It goes to explain:

 "subject to increase without notice, applicable laws permitting, to a price equal to $5.95 multiplied by the wholesale price index (1967 = 100)"

 

:D

 

 

Mon, 06/06/2011 - 21:01 | 1345454 owensdrillin
owensdrillin's picture

Excellent points Jack. How long will they give away oil for fake money is a real good question.

The States needs a leader in the worst way right now. Someone who can tell the truth and explain how much pain there is going to be. There is no easy solution and it is probably too late anyways. The world needs a Ron Paul with a JFK persona.

Mon, 06/06/2011 - 23:11 | 1345817 jomama
jomama's picture

yeah, right. 

someone like that who even came close to having the potential of swinging the pendulum back in favor of the people would find himself suicided.

the state's 'leaders' are installed.

Mon, 06/06/2011 - 20:36 | 1345343 topcallingtroll
topcallingtroll's picture

A huge, temporary reduction in income taxes for earned income would be a great stimulus, along with monetization of the increased deficit.

Just once I would appreciate our socialist government rewarding workers instead of freeloaders.

Mon, 06/06/2011 - 21:41 | 1345585 serotonindumptruck
serotonindumptruck's picture

Holy crap. You really ARE holding out hope that this will turn itself around, aren't you?

Oh wait, you're a troll. I forgot.

Tue, 06/07/2011 - 01:48 | 1346056 BigDuke6
BigDuke6's picture

TCT, Karl Marx said capitalism contained the seeds of its own destruction, but I don't think he had in mind what is destroying the capitalism of the United States: its social welfare system.

Of this year's $US1.5 trillion budget deficit, 52% is accounted for by Social Security, Medicare and Medicaid. By 2015 it will be 160%; by 2020, 180%. The US government will really get into trouble in 2018 (as if it's not already!) when the population growth for those over 65 will start to outpace those aged between 20 and 64.

The trend will not reverse until 2044 and until then, the average addition to the deficit caused by America's bloated welfare system will be roughly $1 trillion ... every year.

Royal Bank of Canada's economists did a US consumer survey recently and asked about their willingness to take certain steps to reduce the budget deficit. When asked whether they would be willing to scale back Social Security, Medicare or Medicaid, 80–90% said "No".

The largest proportion favoured scaling back "other government spending"; the trouble is there isn't much of that. It's mostly welfare and defence, and both are out of control.

America's fatal problem is that because the dollar is the world's reserve currency, financial markets are not pricing its failure to address the budget deficit into the cost of its debt (bond rates), and so while politicians in Greece and other countries are being forced by bond markets to cut back welfare, America is not.

America's generous welfare system was created during the Great Depression, and the Great Recession has exposed the fact that it is unaffordable.

Marx also wrote: "Democracy is the road to socialism", which didn't seem right until now.

Fuck Marx by the way.

Tue, 06/07/2011 - 09:46 | 1346584 Welfareisfraud
Welfareisfraud's picture

Also note this in the article...

 

"some real regulation for the banking industry to restore faith in the stability of the financial system. "

 

I guess the author means perceived "real" regulation, or an attempt at it? Because, as long as the Fed and government at large exist, there is no incentive to "regulate" anything except in the interests of political pressure groups and the elites. The only capable regulator of the market is the market itself; not Ivory tower dimwit soi-disant "elites" trying to dabble in things they have no real comprehension of even in principle, let alone in practice, something Hayek, Mises and many others amply demonstrated.

 

Businesses won't create jobs at the moment because, aside from depressed demand, who the fuck would want to try do something as daring as creating a job in the USSA or USSE, which will regulate every step of the way and extract every pound of flesh of "YOUR" taxes they can. I do love it when the cunts call it YOUR taxes.

Mon, 06/06/2011 - 20:40 | 1345361 wombats
wombats's picture

With roughly 1/2 the population NOT paying meaningful taxes and roughly 1/2 the population on some form of direct gov't assistance it should be fairly easy for Obama to guarantee himself re-election.  All he has to do is demonize and demagogue a little and say that his Republican is going to take away everybody's gov't handouts.  The dependency class will ensure that he will be a slam-dunk for another 4 years.

Mon, 06/06/2011 - 20:42 | 1345379 topcallingtroll
topcallingtroll's picture

Sadly you are probably right.

Mon, 06/06/2011 - 21:13 | 1345507 sherryw
sherryw's picture

+1

Mon, 06/06/2011 - 21:07 | 1345479 laosuwan
laosuwan's picture

All Obama has to do is go through the motions. voter fraud, registering illegal aliens, programming the voting machines will do the dirty work

Mon, 06/06/2011 - 21:10 | 1345486 Caviar Emptor
Caviar Emptor's picture

Don't forget the nearly 2.5 million in US jails, the ultimate 'dependency class'. Too bad they can't vote. But when polled, they favor GOP: lots more generous when it comes to jails (less chance of being kicked out of jail due to stiffer sentences, better security, lots of new facilities opening up)

Mon, 06/06/2011 - 21:18 | 1345516 sherryw
sherryw's picture

Wombats, I assume you are an Aussie. Replace 'Obama' with Julia (phony)Gillard and that will be the strategy to get her back in too.

Mon, 06/06/2011 - 21:33 | 1345563 GoldVsFRNdotCOM
GoldVsFRNdotCOM's picture

"Slum-dunk" would have been more appropriate.

Mon, 06/06/2011 - 21:41 | 1345594 dark pools of soros
dark pools of soros's picture

vote for another Decret Infame

The Zionist supported Germany in WWI vs Russia then flipped over to the allies as it was ending...  then they focused on destroying Russia via the Bolshevik movement..then Germany flips out on the jews in WWII and afterward, as Britain is bankrupt, can't stop the Jews from taking Palestine from them screwing their relations with the Arabs

so in a matter of 30 years..  Zionist screwed over Germany, Russia & Britain.  You think America hasn't been a target as well??

 

 

Tue, 06/07/2011 - 05:18 | 1346141 GoinFawr
GoinFawr's picture

@wombats, tct, et al

indeed, those military welfare queens like their french perfumes expensive; granted it's the only thing that'll hide the stink on 'em. But a trillion per year? And those dogs bite! It's like feedin' Prime Rib to 4 rabid wolverines stuffed into a mini van. I mean c'mon, "gimme some sugar baby" - Bruce Campbell.

Mon, 06/06/2011 - 20:53 | 1345403 Platinum_Investor
Platinum_Investor's picture

Excellent article

Mon, 06/06/2011 - 20:54 | 1345426 Caviar Emptor
Caviar Emptor's picture

QE3 will happen no matter what name they give it and what guise it takes. 

The Roman Empire-in-Decay Orgy will continue: after gorging on QE1, then QElite and QE2, vomiting will be induced once again, markets and the economy will puke, and we'll be ready for round three of orgiastic over-indulgence! 

For your pleasure, a sample offering from your hosts, the Roman Aristocracy: stuffed larks, pike livers, pheasant and peacock brains, flamingo tongues and lamprey milt, sow udders from sows fattened on figs, a "Trojan pig": a roast pig stuffed with live quail. Wines poured from amphoras by Vestal Virgins. 

Mon, 06/06/2011 - 21:01 | 1345439 Temporalist
Temporalist's picture

I just started a modern day Vomiteria.  Weekly membership is cheaper than one cup of Starbuckx...and after your cup 'o joe you can visit our facilities.

Mon, 06/06/2011 - 21:05 | 1345471 Caviar Emptor
Caviar Emptor's picture

As my Pseud implies, I'm well-versed in the ways of ancient Rome: Caligula, Nero, Tiberius, Domitian, Commodus....all will soon become our role models in this economy. We have big shoes to fill...it's gonna be very interesting

Mon, 06/06/2011 - 21:08 | 1345458 nick howdy
nick howdy's picture

Really? You mean let's keep the this crack-whore bitch welfare queen called Wall Street going and have the American Populace pay for it all with the money they don't have...

I don't think Ayn Rand considers Wall Street the "producers" I'm not seeing any. Just more entitled welfare queens. 

Mon, 06/06/2011 - 21:14 | 1345498 sherryw
sherryw's picture

Nick, We all know there is no palatable solution at this point. Tyler is not saying this scenario is a 'good' one, he's being pragmatic given the current rotten situation and the proven unwillingness of the PTB to have done, (or to do) the right thing from the get-go. 

Mon, 06/06/2011 - 21:10 | 1345467 scatterbrains
scatterbrains's picture

I can see it now, as the stock market hits lower and lower lows, grinding it's way lower with CNBC telling everyone, don't sell!! QE3 is coming!! just hold your shares a few more weeks...  all the while on our way to sub 666's

Mon, 06/06/2011 - 21:09 | 1345488 nick howdy
nick howdy's picture

Yea, just hold on..I'm not finished yet!

Mon, 06/06/2011 - 21:10 | 1345492 Madcow
Madcow's picture

maybe we should believe the media.  no more Qe.  Fine with me.  Let all the bonds and rents and munis and financial assets in general fail. Better to get it over and done with now. 

 

Mon, 06/06/2011 - 21:11 | 1345499 deepsouthdoug
deepsouthdoug's picture

Banksters are not going to go for mortgage write downs.  Hopefully 'the masses' are not going to accept mortgage fraud pardons. 

 

How about throwing the fraudsters in jail and that will give you the write downs. 

Mon, 06/06/2011 - 21:13 | 1345509 tony bonn
tony bonn's picture

when a politician's lips are moving he is lying....i remember when the great indonesian lying war mongering sack of shit president said that we have to get our spending under control and we can't go on spending like we have....18 months later it is as bad ever and getting worse and the asshole hasn't done squat except to shovel the money faster into the coffers of his bankster overlords...

Mon, 06/06/2011 - 21:21 | 1345529 Caviar Emptor
Caviar Emptor's picture

QE3, no-QE3: it's the new shell game Wall Street is hoping to play with the public and their money: bet on binary QE3 or no, take odds, hedge you bets with derivatives, options, futures, QE3 swaps and swaptions, play a basket of financials, bet the amount and duration of QE, play hi-lo, bet the date of the announcement, or the superfecta: date, amount, duration and S&P peak. 

Mon, 06/06/2011 - 23:03 | 1345803 infinity8
infinity8's picture

I hear ya, CE - as my sig other and I tell each other every day - "all the dice are loaded, baby"

Mon, 06/06/2011 - 21:25 | 1345541 Madcow
Madcow's picture

no more QE.  The fiat pyramid reached its zenith after 70 years of expansion - and now its "fail" or at least a couple decades of contraction.  deal with it. go to cash and gold and short everything else - especially "college students hoping for a bright future in the United States" -

 

 

Mon, 06/06/2011 - 21:48 | 1345610 pebblewriter
pebblewriter's picture

There's no amount of QE that will arrest the bear market once it gets rolling.  I agree that they'll try something.  Desperate times, etc...  But, investors are finally coming to grips with the economic disaster we're stuck with.  Aside from perhaps one last rebound, I think the market is toast.  http://pebblewriter.blogspot.com/2011/06/watch-for-rebound.html

Mon, 06/06/2011 - 22:12 | 1345658 HungrySeagull
HungrySeagull's picture

That damn blow hard who sits and smiles through his beard should announce all US Citizens get a one million dollar check, declare a year of Jubilee and a total reset of everything debt.

That will light this Nation and vault it into Glory that has to be behold.

 

I tithe 10%, dump the rest into Silver thank you.

 

300 million American Citizens, one million each. How much is that? 300 Mil or 300 Bil?

Mon, 06/06/2011 - 22:14 | 1345669 Stuck on Zero
Stuck on Zero's picture

The authorities (shills in power) have to say there will never be a QE3.  Later, they will say that conditions have changed causing them to revisit their previous convictions and they will support QE3.  This will go for QE4, QE5, ...  until they've drained all the wealth out of the country.

Mon, 06/06/2011 - 22:37 | 1345725 BlackholeDivestment
BlackholeDivestment's picture

Q9/11/11 http://www.youtube.com/watch?v=EMJNQDcHoCg Gap Theory? Naa, Conspiracy Reality ...take three.

You dropped B H O'bomb on me.

Mon, 06/06/2011 - 22:39 | 1345729 Imminent Collapse
Imminent Collapse's picture

As we get closer to the precipice, the lemmings get more excited.

Mon, 06/06/2011 - 23:01 | 1345785 cfigueir
cfigueir's picture

 

Towards the end of 1936, the Fed ended their quantitative easing program. From that point, through 1937, and into 1938 equities fell ~50% and commodities fell ~40%.

Quickest draw in the west Bennie spent lots of time studying the great depression, so he wouldn't let a year go by along with 50% losses, so we'll have to see how much pain he and the administration can take before the balance sheet starts growing again.

At least there's a lot more support for commodities these days...

Tue, 06/07/2011 - 03:24 | 1346109 huggy_in_london
huggy_in_london's picture

I actually think you people on here want it to happen.  

It won't or at least not without something major occuring (and it needs to be an incrementally bigger negatvie), and unfortunately a 4% pullback in stocks and a few weaker numbers won't be the precursor to more QE.  It's utterly without ambition to write about QE3 at this point in time.

In fact, from reading these comments it seems like most people here have a poor understanding of how the banking system actually works and how the transmission of money actually moves.  

You guys wind each other up into a frenzy of the same thought pattern - funny, cause I thought this blog was about thinking differently!  Clearly that's not right!

And as for the hyperinflation fans, lets be clear, its deflation that is the problem in the US right now ... as anyone with a house there will tell you.  And with austerity the 'phrase de jour', that is only going to exacerbate the deflation.  Austerity = lower growth.  That hardly puts inflation pressures inthe system. 

Tue, 06/07/2011 - 03:54 | 1346133 mee-mee-mee
mee-mee-mee's picture

ahhhhh

Tue, 06/07/2011 - 04:02 | 1346135 voshnishki
voshnishki's picture

A quick point:

The author mentions the wage rate failing to keep up with the cost of living, which then in turn acts as a disincentive for business to create jobs. 

I disagree with this notion.  When using the rising cost of living as term for rising prices, it seems to me that the author's statement may not have been entirely accurate.  Just a few comments; in economics, if the "real" wage rate is defined as w/p, then shouldn't stagnant wages combined with rising prices bring down the "real" cost of labor?  In this case, more firms should be hiring because of rising prices (denominator rises then decreasing the cost of the "real" wage)--which is what the author states (implying the opposite--lack of job creation, however).  Despite rising prices, however, firms may not create jobs because there may be over-regulation, rising costs of existing employees, or falling revenue growth.  Given these circumstances, unemployment may rise even despite rising prices aka a "higher cost of living" aka "inflation." 

At this point in the economic cycle, it appears that no real jobs are being created but there aren't a huge amount being destroyed either.  Also, since prices have started pick up at a faster rate throughout the last two years, it seems that wages have also begun to increase, yet at a slower rate.  If current inflation continues to accelerate and prices/numbers continue to rise in energy, food, and the CPI, then this may indicate the acceleration of the "wage/price spiral" and the further inflation down the road if interest rates are not allowed to rise.

With regards to unemployment, unionization seems to have prevented unemployed workers from bidding down wages, and also during this recession, workers may prefer unemployment as opposed to a long term reducation in "real" wages as wage increases continue to lag behind the cost living/inflation.

Tue, 06/07/2011 - 05:27 | 1346158 YHC-FTSE
YHC-FTSE's picture

"I am throwing down the gauntlet and making the call - there will be Quantitative Easing, and a big one most likely, by the end of summer."

 

As appropriately put by John McClane when an unmitigated disaster is unfolding, "Welcome to the party pal".

Yes it could very well be this Summer, but then sometimes along with some of its readership, ZH has a habit of ejaculating its seeds (of wisdom) prematurely about 6months too soon. Of course QE is cumming(:)), but when events are manipulated on the whims of psychotics, the timeframe could be off by months to coincide with some other black swan. 

Tue, 06/07/2011 - 05:23 | 1346166 nathan1234
nathan1234's picture

Before QE3 comes WAR will come IMHO. A war in the middle east or war with Pakistan/China

Tue, 06/07/2011 - 07:16 | 1346236 I Told YOU So
I Told YOU So's picture

the sausage is in the.....damn I forgot the rest

Tue, 06/07/2011 - 08:43 | 1346390 mayhem_korner
mayhem_korner's picture

However, it isn't just the unemployed that will kill Obama at the polls.

Is there a lottery...?

Tue, 06/07/2011 - 10:18 | 1346566 Ura Bonehead
Ura Bonehead's picture

Today we are heading into the summer with a 1.8% annualized growth rate, likely to be revised down a notch, and as QE 2 winds up entirely at the end of June we are likely to see a slide to below 1%

Your own analysis shows exactly why there will NOT be (certainly should not be) a QE3. IT HASN’T WORKED!! Look, far be it from me to discourage the 'aliens under the bed' crowd around here, but Bernanke and others have made it clear that QE ends June 30th (save mortgage runoff reinvestment). Period.  Fisher said it best this morning, that every negative stereotype of the Fed would be confirmed (and embolden the loons) if they signaled the end of QE and then started a formal QE3. If the shadow role of the Fed is to raise equity prices then a 'surprise' round of QE would do little for investor confidence. Besides...

IT HASN’T WORKED!!!

As wealth managers we’re forced to play the hand we’re given, not the hand we want (which happens a lot on ZH).  Rule one of the game, whether a pair of twos or pair of Aces, is ‘don’t fight the Fed.’

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