It's Official: QE 2 And The Tax Cut Have Been A Failure

Tyler Durden's picture

From Peter Tchir of TF Market Advisors

It's Official: QE 2 And The Tax Cut Have Been A Failure

Well it looks like the rich have taken the tax cuts and used the money to buy 'necessities' at Tiffany's rather than hiring people.  Weren't the tax cut extensions necessary for hiring?  It really looks like that money went straight to little blue boxes.  Does Kraft Mac'n Cheeses still come in dark blue boxes?  Maybe we aren't separated into rich and poor, just which shade of blue box you can afford?

It is hard to find anything encouraging about the numbers out today.  For the past 4 months now, the NFP has added 752k jobs.  610k of those have been birth/death jobs.  If you do year to date, it's not as bad since January saw a large negative birth/death adjustment.  I am concerned about the validity of the birth/death model.  We have gone through such unprecedented changes in the economy I find it hard to believe that the model is calibrated well.

I still like being short IYR, SPG, VNO on the back of the move in CMBX.  I am digging deeper into corporate credit, but 2 worrying signals are there.  Recent new issues seem to be struggling.  Even GOOG is wider.  The indices are also starting to trade fairly cheap to fair value.  This combination is rarely good so selling LQD (on spread basis) and HYG while collecting more details for this analysis.

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FunkyMonkeyBoy's picture

... sounds like a good case for more QE to me... er, no.

However, what other bullets does the privately owned FED have?

Weisbrot's picture

cost of hiring is too high

too much gov regs & mandatory employee expenses


Bob's picture

Yeah, we gotta cut worker protections to enable employers to hire people in the US.  A new meme in the making!

camaro68ss's picture

Im starting to get the shakes, I need some QE3 quick

carbonmutant's picture

Smoke a little hopium, it'll take the edge off..

JW n FL's picture




that's bullshit!


Look at Corporate Earnings!!!!


Look at the Stock Market!!!!!


Your Bottom Up views are getting OLD! TYLER!!


QE was a Winner! for Winners! You are just mad Losers did Not get anything! WELL! they are losers! thats why they did NOT! get any of the $18 trillion dollars!!!!


Even Tiger Blood, Junky Charlie Sheen got a $100 Million!!! 


Look.. its like this.. there is this big Club! and You and the rest of these fucking Losers here aint in it!


I mean, you are in the Club that pays for the $18 Trillion Dollars Spent Club!

So the Pay For Club! You are in.. the Spending Club! You ain't in!!


All you fucking, pussy, bitchy (like lil women) get out on the street and make daddy some money.. so that daddy can spend his $18 Trillion  and not think about it! 

SmoothCoolSmoke's picture

"QE was a Winner! for Winners!"


Not a debate champion were ya?

alangreedspank's picture


By "protection" you mean getting a good salary doing a job any one armed twit could do right ?


Bob's picture

Nah, I was meaning ALL protections.  I'm glad to see that people, failing to perceive my sarcasm, junked me for sounding like such an asshole, though. 

3.7.77's picture

So business income continues to spiral downwards with no one working to buy the crap.

augie's picture

there are a billion consumers in china. keep that in mind when viewing this hyperlink

XitSam's picture

OK, either the rich spent their money at Tiffany's which put it in the bank, or the rich put it in the bank directly.  Does anyone really think they are each sitting on a big pile of it like Scrooge McDuck? To blame the "rich" in this regulatory environment is silly.

TheTmfreak's picture

No kidding. Or at least an over-generalization blame on the rich.


Here is an idea, come up with products that the rich want to buy and therefore get THEIR wealth! If the rich are buying, they must buy it from someone. Who is the someone? Other rich people? Perhaps, but unlikely. The rich also aren't out there at Walmart or buying stuff from huge shitty corporation. They don't spend their money at home depot on Chinese shovels. Therefore, the "not rich" should make goods they want to buy!

tarsubil's picture

How about "accident" insurance?

Monday1929's picture

Yes, must eliminate mandatory employee expenses, like Pay checks every week. This would help the environment, too. So, we can please the Right, and the Left.

jmc8888's picture

Actually it's too low, but bankster propaganda will change that viewpoint, and it has for you.

People are fucking idiots.  You do believe in capturing every sohpistry laced 'self limiting behavior' based on complete bullshit.

Cost is too high? Actually since minimum wage should be over 30 bucks if you compared 30 bucks with 25 cents as being equal when minimum wage started, and that we've cut regulations down to the bone (particularly GLB in 1999), and retirement costs are're right....opening a business here is only PARTLY a sweatshop, and you want full on sweatshop for your 'hard stolen fraudulent debt based fiat'.

...and even if you got your'd still use your money to buy Tiffany's instead.

That's the game....always give me more...then I'll open up shop.

Why. Because

why. Because

Why. Because

Why. Because

Glass-Steagall and bury these assholes in their own shit.

slaughterer's picture

If QE2 was a failure, why should BB initiate QE3?  I am sure he wants some time to, in professorial fashion, re-examine his hypotheses and models.  Therefore it will take time for QE3 to launch, and it will not be the same as QE2.  In the meantime, Wall Street gets to press the sell button.  Deflationary hell has to be created for BB to jump in, the jobs situation is bad enough, so nothing has to be done there.  It is going to be a long, ugly summer of misery...

No One's picture

if at first you don't succeed, try try again...


(and what makes QE2 a failure? Have you seen the Wall Street bonuses? QE2 worked like a charm).

I am more equal than others's picture


the definition of insanity is to do the same thing over and over again and expect a different outcome.


the bernaked has wished for us whilst the banksters have shit on us.  Sir.... may I have more?  (from Olivier Twist and Animal House)


Eternal Student's picture

I agree with Bernake fitting the definition of insanity.

I'll bet that he's 100% certain that it will work this time, fur sure!

TheTmfreak's picture

Triple down on another QE!


Reminds me of a friend of mine who put his rent money on black because black hit 3 times in a row, and it landed on red. Called me broke in Vegas like an idiot.

Mad Max's picture

what other bullets does the privately owned FED have?

They could point the gun into their throat and pull the trigger.  That would largely fix the economic problems after 1-3 years of sorting things out.

Chances of this: zero.

A.W.E.S.O.M.-O 4000's picture

I think they are getting ready to use the real kind

scatterbrains's picture

and it looks like a gangbang crew are starting to gather around ms long bond futes too.

Ancona's picture

Just now figuring that out now? We have been deriding it for the last year.

agent default's picture

Yeah well third time is a charm.  QE3 here we go.

Cdad's picture

Agreed.  Very quietly, and in typical Wall Street engineered fashion, this overblown REIT group has been leaking quite noticeably.  After almost three years of ramping, this group looks done.

trav7777's picture

...wish I could agree, would love to short the CREITs to their true valuations.

But I am looking at SPG up there at 114 and not really seeing the "signs" of cracking quite yet.

Joeman34's picture

REITs will remain strong because investors need yield have very few opportunities to attain it.  Given many REITs have significantly higher yields than many fixed income investments, they will remain strong as they're added to portfolios as yield substitutes. 

Monday1929's picture

Right, and its real estate, which never goes down. It all went up together, it will all go down together. When   is the only question.

I am more equal than others's picture

Actual yield is created when people/companies pay their rent.  No rent - No yield. 

Yield is diluted by driving up the stock price (rents aren't going nor are occupancies).  There will be more 'no rent' situations than not going forward.  REITs continue to dilute the stock by issuing more.  Guess what's going to happen? 

SheepDog-One's picture

The takedown will be sudden, probably large scale false flag attacks around the country. People wont be worried about their REIT's, theyll be looking at the supermarkets and banks burning down due to the chaos and riots when the sheeple of america panic.

Cdad's picture

The takedown will be sudden

Correct in relation to property [REITs].  The real value of property is nowhere near in sight yet, despite the bloat in this group.  For example, had the Fed not taken in all those bad mortgage obligation crap instruments, there would have been no rush into this group, less those seeking income.  At current prices, the risk reward on hanging around for quarterly distributions is FUBAR.  

Per Simon, that will be the last tree to fall [because it is the aglo darling fav], especially now that the retail group WILL BE, as Peter Yastrow shouted, looking at its coming depression [just watch the XRT for confirmation].  Blue boxes will not support malls.  Tiffany's...yes.  Mall [un]occupancy will be a headline story in coming months, years.

The fake, money printed bounce is ending. The job picture will worsen, not improve.  Employment requires a real economy.  Now, if uncle Ben goes in for the kill on the middle class yet one last time...who knows what will happen...but I doubt it will be shop owners stepping up to pay inflated rents in deserted malls.

Dr. Richard Head's picture - Foreclosure WarZones Around the US

Perhaps the red dots are coordinates for the unmanned drones to attack.  Just like FDR paid farmers to till under their crops, Bush O'Bama could consider bombing the shit out of foreclosed homes.  Perhaps this help that birth/death adjustment for jobs even more into his favor, as well as reducingthe inventory of homes on the market.  We wouldn't want cheap housing for the plebes now would we?  Can't have housing prices falls because the banks would be hurt.  We need to protect the banks!!!!!!!! 

Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Very prescient SheepDog-One!


Tuco Benedicto Pacifico Juan Maria Ramirez

brian0918's picture

Tyler - Didn't you hear? This lull is just transitory - the result of one-off weather events, meltdowns, and uprisings. They have no underlying connection, and so there is nothing to worry about.

FEDbuster's picture

Government spending is way past taxation (income) solutions.  The debt bomb is ticking and loss of reserve currency status will be the trigger.  The rest of the world needs to cut up our credit card, and take away Benron's computer.  Only then will the fraud and counterfeiting end, and the games (WW3) will begin. 

ibjamming's picture

America and Europe...unite to take over the ME oil.  We need cheap oil desperately.  Do you think TPTB will let it all fall because of the Muslims?

FEDbuster's picture

That's where WW3 will be fought.  America and Europe vs. Russia and China played out on the Mideast oil fields.  The Muslims will just be pawns in the game.  Israel vs. Arab countries could be the flash point needed to get the party started, or some sort of OPEC restructuring of payments for oil (no more acceptance of dollars).  I don't think TPTB will go down without a final fight.

JR's picture

When the point of macroeconomic debt saturation “is reached, then adding more debt or even printing more money will only lead to further unemployment as the cost to carry that debt adds more and more burden to the economy.  This concept is the one that puts the complete lie to all the supposed economic experts as the diminishing returns of debt created have already shown.”   Nate on Nathan’s Economic Edge June 3, 2011

Djirk's picture

well that is surprising.

digalert's picture

Anyone remember way back in '09 when all the analysts, prognosticators, Barama fans, MSM...crystal balls were predicting "Q2 turnaround", "summer of recovery", Q3 recovery, 2H rebound?" yada yada yada

Urban Redneck's picture


There was a HUGE turnaround in 2009.  In 2008 Wall Street was laying people off left and right and there weren't record bonuses (for one year).  Obama's desire is full employment and record bonuses for Wall Street EVERY YEAR, otherwise, the ponzi and the spending desires of the White House and Congress are unatainable.  This is the perverse incentive of the current tax burden distribution (Wall Street bankers & firms are a form an outsize percentage of the top 1% and 5%.  Therefore, the bank(er)'s income needs are the tax needs of the government.  As it was between 2008 and 2008: Deficit-to-Spending and Debt-to-GDP moved from 35.1% to 63.3% and 70% to 84% respectively.  If the 2008 layoffs had continued and there wasn't a 2009 Obama Banker Full Employment & Bonus Plan and tax receipts dropped by $500B, then Deficit-to-Spending would have risen to over 90% and Debt-to-GDP would have been over 100%, and the ponzi would have collapsed two years ago.  Washington desperately needs banks &  bonuses to continue to spending orgy.  Changing the politicians & their spending habits is the ONLY way to reign in the banks and bankers.


vxpatel's picture

Failure for whom?

The rich are richer...and that's what matters in a free market.

SheepDog-One's picture

The rich will also be screwed, unless theyre in the 'super elite rich' which youre not in unless your net worth says 'trillions'. Millionaires, even billionaires are looked upon as peasantry by the puppet masters.

JR's picture

Yes. What's more, in Obamaland “rich” is an income of $150,000 for a single taxpayer.

YesWeKahn's picture

Asking Bernanke to admit the failure would be more difficult than asking the NY hotel maid to accept the sex advance from Kahn.