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QE 3 Will Only Come With Catastrophe
The financial world is buzzing with the news that Bernanke telegraphed QE 3 this Friday. I don’t see it. The political landscape in the US is changing fast and the Fed is going to be coming under increased scrutiny going forward.
Look at the recent article from Bloomberg revealing the Fed’s issuing $1.2 trillion in secret bailouts to Wall Street. Look at the comments from Paul, Perry, and Bachmann about the Fed.
This isn’t 2010 when the Fed could launch a new QE program without any real political consequence. Bernanke is going to be lumped in with Obama and used as a political tool for the 2012 Presidential election. We’re already seeing signs of this now and the election is still a year away.
Remember, Obama was the one who re-instated Bernanke. This fact will be used in the debates and during the political process in general. Not many commentators noted it, but the political tide turned with QE 2 when public consensus went from “the Fed is saving the world,” to “the Fed has blown up the cost of groceries and energy.”
Going forward, no one will buy the idea that QE is going to help the economy any more. That kind of argument works in an environment without any approaching elections, but we’re no longer in such an environment: within 14 months people will be voting.
If you need an example of what I mean, take a look at Angela Merkel in the German elections. Her party has been getting absolutely destroyed. And the primary reason is her backing of the Greek bailouts (56% of Germans say the Euro has brought them disadvantages).
Bernanke cannot simply launch QE 3 as he pleases anymore. In order for QE 3 or something like it to be unveiled, we’re going to need to see either:
1) A MAJOR bank fail
2) A full-scale Crash with the S&P 500 sub-1000
Put another way, the Fed’s tools (QE and otherwise) are now going to be implemented to “avert catastrophe,” NOT to “improve the economy.” The bulls don’t want to hear this but it’s true. The game has changed dramatically in the world. The next time the Fed acts, it’s going to be in reaction to some BAD happening.
So if you’re banking on QE 3 now, you might be in for a big surprise to the downside. The market rally last week was the start of end of the month performance gaming, NOT the market believing QE 3 is coming in a few weeks time.
However, regardless of when or if QE 3 comes, the fact remains that the financial markets are on DEFCON Red Alert today. Indeed, I fully believe we have entered the Second Round of the Great Crisis: the Sovereign Default Round. The First Round (2008) was just a warm-up. This time around, we’re going to see entire countries go bankrupt along with stock crashes, civil unrest, food shortages, bank holidays and more.
Many people will lose everything in this mess. Yes, everything. However, you don’t have to be one of them. Indeed, my Surviving a Crisis Four Times Worse Than 2008 report can show you how to turn the unfolding disaster into a time of gains and profits for any investor.
Within its nine pages I explain precisely how the Second Round of the Crisis will unfold, where it will hit hardest, and the best means of profiting from it (the very investments my clients used to make triple digit returns in 2008).
Best of all, this report is 100% FREE. To pick up your copy today simply go to: http://www.gainspainscapital.com and click on the OUR FREE REPORTS tab.
Good Investing!
Graham Summers
PS. We also feature four other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s my proprietary Crash Indicator which has caught every crash in the last 25 years or the best most profitable strategy for individual investors looking to profit from the upcoming US Debt Default, my reports covers it.
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Zero rates don't help in deflation. Long rates are telling the truth; safe bond yields are at record lows because the market is sniffing out a deflation. The bond market does not lie and it is too big to control.
the bond market is manipulated through IR derivatives
I believed in 2009 that zirp would eventually BE PROVED to be a disaster. I now firmly believe it will be written in history why we collapse.
Exactly. We skipped to QE4. QE2 was to keep interest rates from rising. Saying that we have _at least_ 2 more years of ZIRP (and the Fed will do whatever it takes), is having an open ended amount of funds, and latitude to do whatever is necessary.
Others have pointed this out: If interest rates tick up, BOOM, game over.
So what difference does it make what the Fed does? We already know its course. The rest is just responding to the oncoming series of crises.
"Remember, Obama was the one who re-instated Bernanke."
Do you really think this statement furthers your argument? Obama had been president for all of 7 months when he "re-instated" Bernanke. It was a non-partisan move as Bernanke was a well-known Republican.
If you can't be objective, be quiet.
Sure he's a republican who was opposed and still remains opposed by conservative republicans. Think I'm wrong look up Jim Bunning (R) Kentucky quotes on the Bernank. His reappointment was as a result of democrats voting for him en mass.
With respect, isn't the fact that Jim Bunning opposed the reconfirmation of Bernanke, reason enough to reconfirm him?
Bernanke understands signs about the economy
Bunning understand signs from the catcher
anybody with a clue knew the fed was going to destroy our way of life so the new world order can come in and be the so called savior. IF YOU'RE TO STUPID TO SEE THE WRITING ON THE WALL maybe you should be quiet
gorilla, @ 14:08,
Well, no,some were confused and just for a MOMENT thought we had a true emergency,but that was with just TARP.
When it did not stop there, THEN,we knew,we were screwed,100%.
And pls do not have the audacity to claim your a Seer, and SEE all things.
If you can't confuse them w/ facts,baffle em' w/Bullshit.
Blaming the Fed is like blaming the blade of the guillotine that's about to cut off your head. If the blade breaks, they hit you over the head with a 40 pound boulder. From what I hear the guillotine is the way to go. I want my brains in a nice wicker basket when I go; not all over the floor or the wall behind my desk.
As far as the hand writing on the wall is concerned, Dude, That was my writing. I was the Chalk Boy at Belshazzar's Feast. I copied all those numbers, weights and measures on that wall. And I remember exactly what they were, Dude.
bid the soldier @ 16:37,
< I was the Chalk Boy at Belshazzar's Feast. I copied all those numbers, weights and measures on that wall. And I remember exactly what they were, Dude. >
Couldn't been you,there was no chalk,just a finger.........................not your's.
"5:5 In the same hour came forth fingers of a man's hand, and wrote over against the candlestick upon the plaister of the wall of the king's palace: and the king saw the part of the hand that wrote".
Was he holding a piece of chalk? Or were his fingers bleeding?
It's not what he wrote with. It's what he wrote.
God's not crazy about nitpickers, pal. Just a friendly heads up.
Hey nigger do you think your statement is any less FUCKING STUPID than his than you should just be quiet. New world order stupid fuck. God damn grassy knoll, false moon landing glen beck, two white people in africa adam and eve mother fuckers please identify yourself so I can shoot you. Your statement is vague and non-sensical and then you tell someone else to be quiet?
Not quite sure yet what dose of that new prescription is right for you? Whew! I'm thinking back off the dose just a wee wee mite 'fore you harm yourself.
I pointed out weeks ago that QE3 would come after a major act of g-d like a major quake or ...a devastating hurricane.
Looking back from the future, it turned out it will be both. Hold on to your freakin seats, the earth is about to rumble and tumble!
I agree with Graham. Too many "analysts" and the masses at large are afflicted with a Pavlovian syndrome where Uncle Ben responds with monetary stimulus to solve every ailment in the economy, never mind that the REAL problem is FISCAL. The problem of too much DEBT can only be solved by reduction of the same via paydown (yeah right!) or default. Uncle Ben like Uncle Alan have taught the masses that "extend and pretend" can go on forever. Every crisis since the mid eighties, was solved by pumping more easy debt based money (cash + credit) into the system. There is NO WAY this can be solved without pain. Hope is not a strategy and Change is inevitable and sometimes painful.
Technically, it remains to be seen if the market does something similar to 1987 where we had a double bottom and a breakout before the collapse. That means we would take out 1208 on the S&P to run the buy stops and then collapse.
I reckon he actually gets this, you know. I think that's what he was saying at Jackson Hole. Many saw contradictions between the comments about having 'tools for growth' whilst not being able to do anything about 'long-term growth'. Key being 'long-term' - he knows he can briefly boost the stock market/commodities/nominal GDP with additional printing, but he basically also said unless we get the fiscal house in order, and unless Europe does so too, then we're all fucked.
Anyway, not sure why I'm defending the Fed in the first place: bring on the red votes.
The whole QE3 topic has me thinking of Bernanke starring in a horror movie weilding a shaking revolver with only one bullet left:
"Keep away from me, I, I, really mean it, I'll shoot."
He can't shoot, because he knows if he does, he will be out of bullets.
Many bullets left. Read his deflation speach. Its his play book.
"Rommel you magnificent bastard. I read your book !!" George C. Scott as Patton
There'll always be plenty of bullets left. Bernanke has dozens of clips in his pocket.
But every time he shoots one bullet, the dollar goes down and every time it does it goes down faster.
If another QE is launched the dollar might lose 8 to 10% of it's value and the inflation chain reaction will go even faster.
The problem is that they don't know what to do with the QE. How can they improve the economy?
The answer? Nothing. We have to take it like a man and sweat it out, and they will start to realize that this is what they need to do.
It's not a popular thing and with elections comming up and all...
But what will the new presidents in spé do? Promises to get the economy going again? Yes. And how? Well by throwing money at it.
I really think the outcome for the dollar and euro are pretty clear now.
There'll always be plenty of bullets left. Bernanke has dozens of clips in his pocket.
Yes, and he can print all the bullets he wants.
But throwing money at the economy won't save the economy. All that money he throws at the economy creates new debt, and debt is the problem to begin with.
And he's not throwing it at the economy. He's throwing it at Wall Street and Washington. Banks & government.
And they're doing great. Wall Street is doing great. Washington is doing great. No sign of recession on Wall Street. Record profits & bonuses. No sign of recession in Washington. Record federal employment. Record spending.
When are people gonna figure out Bernanke cares only about Wall Street & Washington, banks & government. That's it.
He doesn't give a flying fuck about the economy nor the American people.
They say we're in a recovery. Yes, Wall Street & Washington. They're recovering just fine. Doing great. Swimming in money.
But all that money he's printing and throwing at Wall Street & Washington is destroying the value of the US dollar. It's why gold is $1800 / oz now.
And yes he'll keep doing it. One way or another. If not QE3 then some other way.
Long gold & silver is the safest bet around now. It's guaranteed to pay off.
Why? Because Bernanke absolutely will keep printing and throwing money at Wall Street & Washington, and diluting the value of the dollar. It's guaranteed.
I'm mainly in agreement with you lecherous...ummm..I mean cranky-old-geezer. But remember many Americans have retirement accounts tied directly to the market so the fed pumping the market also pumps these accounts. In fact, one less spoken reason for the obscene market re-inflation could be a fed response to the chilling awareness of the number of retirees now and soon to become dependent on their retirement accounts.
But remember many Americans have retirement accounts tied directly to the market so the fed pumping the market also pumps these accounts.
Yes, and those people are called the investor class, but while some are invested in equities markets we ALL have to get by on dollars. I am retired (disabled vet actually) and I frankly could give a rats ass about the poor long suffering fools that put their entire future into speculative investments and then cry when markets do what markets are supposed to do, rise and FALL. In the interim my income buys less every single day because the Fed/treasury are destroying the US$.
Anyway the premise that average people have their retirement accounts in equities is iffy at best, maybe some do when they are still 20 or more years from retirement but the vast majority of people retired or within a few years if they have anything other than their SS have the money parked in the money markets, CD's, bonds, and they are getting gutted by negative real interest rates.
The idea that the Fed is supporting equity markets, or should, is nothing but a blatant theft from the bulk of the people to the wealthy over class. It is not part of the Feds mandate, price stability and maximum employment are. Any/all support for equities and the financial manipulator class has and will negatively impact both price stability and Main Street employment, there is an inverse relationship between the black hole of the unearned income of the rich and the well being of the rest of the nation. Supporting prices on the NYSE and NASDAQ under any theory is still just preventing markets from properly functioning in order for the owner class to reap gigantic rewards at the expense of what is fast becoming a proletariat whose only hope for financial security will be the Lotto, and once that is the case they will figure out how to rig that for the benefit of the wealthy. If you do not want communism in the USA then you better find a way to stop the creation of a permanent class of serfs, because only through balance can we thrive as we once did.
Nice try but no cigar.
Bernanke doesn't give a flying fuck about those retirement accounts nor the people who own them. He pumps stocks up to help Wall Street. That's it. That's all he cares about.
And those people won't own those retirement accounts much longer. They'll be confiscated at some point. Aasets stripped out and worthless IOUs put back, just like they did to the social security "trust fund".
We're dealing with white-collar criminals folks. Pirates in pinstripe suits. Looting everything and everyone they can. No, they can't resist that 2 trillion of retirement account assets just sitting there within easy reach.
They'll figure out a way to get it, all of it, and tell the American sheeple it was necessary for national security or some nonsense like that.
And the American sheeple will believe it and accept it and go along with it. That's the really sad part. Hell, they'll even reelect the president who stole their retirement assets. That's how stupid and blind and gullibe they are.
Stupid blind gullible sheep deserve to be sheared. They deserve to lose every penny in those retirement accounts.
Excellent crankyness old dude.
i cam eon this thread because i wanted to talk about gold and i thought, yeah summers... surely.
so if you are thinking of getting on board and are hoping on a bit of weakness 'cos you're old and mean then be ready, there may , may be a short opportunity if the eurozone crises forces some on the market.
Germany is rumoured to be demanding security and there is newly awakened interest in the gold reserves of the olive zone countries. With the northern eurozone countries becoming hostile to the idea of further bailouts, debt-mashed eurozone countries could find themselves under increasing pressure to raise money by selling off their assets – particularly their gold reserves.
Greece is sitting on an estimated 125 tons of gold, while Portugal holds 383 tons, there could be a short pause on the ride up. i'm getting ready.
EVERYTHING!!! Again in chorus, EVERYTHING...
Potus (Capital "P" only to be grammatically correct) and The Bernank: " We will do what ever it takes".
Translated: We will use you, your labor, along with its earning power and your savings (property), in any way we want. Got that, sluts"?!
EVERYTHING, ......... Bitchez!
"We will do what ever it takes to save Wall Street".
Fixed it.