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To QE3 or Not to QE3 - That Sets Direction
To QE3 or Not to QE3 - That Sets Direction
We did our Hamlet post for the ECB last Thursday and, like the Prince of Denmark, the dithering by the former Deutsche Mark crowd on whether or not to support the union of Mother Merkel and Uncle Nick, who killed the Fatherland in order to take their place at a new EU table - goes back and forth endlessly, swinging from pledges of bold action, right back to more inner monologs - where much is pondered but nothing is actually fixed.
In Hamlet, the action is moved forward by haphazard events, with Germany's decision-making driven by fear of the hyper-inflationary ghost of the past while a castle full of knaves and fools twist and turn along the path which fate will, inescapably, lead them all to.
Sadly, in Hamlet, pretty much everyone ends up dead, dropping off like flies, one by one as their little union falls apart and things spin out of control. In the end, Norway has to come and take over the ruined kingdom - presumably because they have all that oil money and a balanced budget....
It was Polonius (Ophelia's Dad), who first said, "neither a borrower nor a lender be" (shame on your English teacher if you thought Ben Franklin didn't steal it) and the continuation of that couplet is "for loan oft loses both itself and friend."
The European Governments aren't making any friends with their drastic austerity measures and the program they came up with (see "The Rube Goldberg Solution") simply guarantees a recession while doing virtually nothing to solve the debt - just another game of kicking the can down the road.
But what is the point of kicking the can down the road if you are doing nothing to improve your situation? Does the EU really not understand the game? Businessmen punt all the time - when bills pile up, sales are down, and times are tough - we restructure, we refinance - whatever it takes to buy time and improve our cash flow, but THERE'S USUALLY A PLAN! You don't just begin haphazardly shutting down operations while hoping your revenues randomly improve.
Austerity NEVER works! The UN's Economic Think Tank, UNCTAD, in its September report, entitled "Post-Crisis Policy Challenges in the World Economy," savaged U.S. and European economic policies and called for wage increases, stricter regulation of financial markets, including a return to a system of managed exchange rates, and a conscious break with market-led thinking. "The message here is very pragmatic: we need to reverse our course quickly," said UNCTAD Secretary General Supachai Panitchpakdi.
Supachai, a former head of the World Trade Organization, claimed the policy response to the crisis, particularly fiscal tightening, was misconceived and inept. The report's lead author Heiner Flassbeck, head of the globalization and development strategies division at the U.N. Conference on Trade and Development, and former deputy finance minister in Germany, called current policies a disaster and said global economic situation was extremely dangerous. Without more stimulus, a decade of stagnation was the best-case scenario.
If interests rates everywhere are zero, and if governments stick to the policy of not only keeping fiscal deficits where they are but retrenching, cutting public expenditure, then we will end up in permanent recession. Unemployment depends very much on demand. And if you have no demand then you need government to step in with a huge program for stimulating the economy. This was the U.S. scenario in the past. Now it's worse because wages are rising less than in the past so you're going to need a bigger stimulus program.
The recovery from the financial crisis was not only jobless, which was to be expected, but it was also "wageless," with Americans, Japanese and Europeans -- 70 percent of the world economy -- expecting their incomes to stagnate. In its last report a year ago, UNCTAD said a premature removal of stimulus policies might cause a deflationary spiral with attendant slumps in growth and employment around the world.
"Let's not fool ourselves. This is a realistic scenario for the whole developed world, if we do not understand the lessons now, and really quickly, because we do not have other instruments any more," Flassbeck told a news conference to launch this year's report. "To revive the economy with a wageless recovery with diminished expectations by the private economy, by private households, what are the instruments at hand? There is nothing."
The report put much of the blame for the crisis on deregulation of financial markets, which it said invited destabilizing "herd behavior" by speculators, and allowed an over-concentration of banking activities.
What we've seen in the past and we never learn is that countries seem to have excessive belief in the financial markets. And we've seen time and again that financial markets are not very sound in their judgment. But still people keep thinking that they are doing these austerity measures because they want to please the markets so that the markets give them better ratings, including the rating agencies which do not always produce the best assessment.
According to Flassbeck, the herd mentality is evident whenever equity markets and commodity markets all lurch in tandem on the same day, an effect that could not conceivably be caused by real swings in demand. But the world ignores it. "If the G20 negotiations were not confidential, I would tell you that it's ignored even there."
You can feel the frustration in that statement. Why is it that we've spent, internationally, over 20% of the global GDP handing money out to Investment Banks, regular Banks and Big Businesses, but have done nothing for the customers? Note the above statistics are from 2003 and have gotten much worse since then. This problem has been coming down the pike for many years and eliminating the losses that have been realized due to the problems of social imbalance does not prevent the same problems from upending the economy again.
At the moment, all we can do is kick that can down the road again. If they don't come up with AT LEAST $500Bn of new stimulus to get us through the next 6 months, I will get very bearish indeed and if they do come up with $500Bn or more, then we will ride that bullish wave until it's time to flip short again. Nothing the Fed or the Administration does that doesn't take concrete steps towards creating jobs and rebuilding the infrastructure of this Nation will cause a sustainable improvement.
The rest of the World is dragging us down and it's not like we're strong swimmers in the first place.
Take the ICSC Retail Store Sales Index, for example. It's down 0.1% week over week after being down 2.3% the week after black Friday and is now up just 2.9% for the year after being reported up 3.8% just last week. Despite another fall after the steep post-Black Friday drop, the report believes "consumers are delaying their final gift buying more than ever, a trend that points to sales strength over the next two weeks" Whuck? Are there people who actually read this BS and just nod their heads and think "well, sounds like retail sales are doing great"?
Speaking of Retail Sales, BBY missed by .04 (10%) with revenues missing by less than 0.1% so let's think about that for a moment. Had they sold 0.1% more stuff, would they likely have made 10% more money? No, probably not. That means that the stuff they are selling is simply not making enough money. How many retailers does this apply to with their "great" sales? Unfortunately, we'll find out in January.
Overall November Retail Sales (including food and gas), were up 0.2%, which is 60% less than the 0.5% expected by Economorons and down from 0.6% in the prior estimate. People, these are not good numbers. This is an economy that needs real stimulus and all we've done so far is bail out the top 1% (including top Corporations), who had their best year EVER - thanks the the bottom 99% taking on more debt obligations than ever through their Nation's borrowing and having their currency devalued more than ever through their Nation's money-printing.
The Fed or not the Fed - this is not likely to end well so please - be careful out there!
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The elite of 1% holds the debt that the masses of 99% are servicing in some way or another.
Any further dilution of "precious" paper Dollars or debt cuts would hurt that important 1% who has amassed trillions of wealth over the centuries.
Unless we get the political will to take on that 1% the 99% will always just muddle along, possibly starve but they will never be on the receiving end of federal policy.
The 1% control the money, the debt and the politics. Why we let it continue is beyond stupid.
Home sales "worse then expected"
http://finance.yahoo.com/news/existing-home-sales-revised-lower-23470010...
Our cup of fucketh runs over
Folks, QE is not economic stimulus it's financial stimulus. Wall street stimulus vs main street stimulus. The Fed is pushing on a string
JPM and GS don't need anymore juice. The market is all the Fed cares about for some stupid reason.
QE3 has been going on for a while now. Check out Money Supply M2 expansion.
1 out of 45 AMERCIAN Childeren LIVE on the STREET!!!!!!!!!!!!!!!!!
FUCK THAT! THAT'S SICK!!!
ANYTHING ABOVE 0% IS A INDICATION AMERICAN IS NOT WHAT IT THOUGHT IS WAS!!
I don't think anyone is really in favor of millions of homeless children. The real quiestion is what should be done about it. What do you think should be done?
According to Jim Willie, QE2 never ceased; the fed has been printing all along and bailing out banks, countries and every fed-friendly corp.
Its QE on the QT, it's just not being broadcasted because it would not go down well with the Main street audience. Have you heard of any banking crisis in the US lately??...not about to either; the fed has got their backs...behind the scenes, of course!
Recent Blmbrg articles that seem contradictory:
Bernanke Signals Fed Ready to Ease on EU Risk
http://www.bloomberg.com/news/2011-12-14/bernanke-signals-risks-from-europe-crisis-keep-fed-ready-for-more-easing.html
-followed by-
Europe Stocks Retreat After Fed Holds Stimulus
http://www.bloomberg.com/news/2011-12-14/stock-futures-decline-in-europe-as-fed-refrains-from-adding-fresh-stimulus.html
Geez Phil, you know the game. Patience... No point manning the money pumps with oil at $99 and the euro at $1.30
Need to wait for that 'whoosh' sound from the commodities and FX markets...
Once europe is paraletic and choking on it's own vomit, duff man can fly to the rescue...
While Gold is Money, the economic system may, or may not 'still favour a ramp in Gold': money-printing is not a panacea, it is a band-aid - and perhaps that is becoming realized. ...that alone places 'policymakers' in uncharted terriatory.
What is perhaps understood by our self-educated luciferians, is that civil disorder is now very much on the table - notwithstanding the use of combat weaponry- and unless real incomes begin to rise and the investment climate stabilizes, the citizens will gladly grind the country to a halt.
The debate has, in a sense, already moved thru 'regional/federal' response, support and agreement - and it is now individual countries which will have to pluck themselves out of the mud. In that sense, the existence of TBTF Banking has ceased to be strictly relevant, personally, I don't think nyone has the money to afford them anymore
So how does Hamlet's desire to fuck his mother fitting into your little narrative, Phil? Is Ron Paul Laertes or Fortinbras?
"And cut his throat in a church!"
"Now, that's a little over the top."
See: Dollar is getting strong which setting the stage for coming QE3. Strong dollar will hurt US export and real economy, ut it's necessary step for QE3. I think it will start in early Q2 of 2012, buy the dip in Q1 2012. Dancing with Bennake.
"...Without more stimulus, a decade of stagnation was the best-case scenario.
Unfortunately, that's the same failed mentality that made the Great Depression, "The Great Depression".
See historian Thomas E Woods, Jr.'s talk about the way the government handled the two depressions in the 1920s and how those differing responses played out in the economic arena:
Why You've Never Heard of the Great Depression of 1920 | Thomas E. Woods, Jr.http://www.youtube.com/watch?v=czcUmnsprQI&feature=related
Or see Rothbard's description of the massive government interventions under President's Hoover & Roosevelt and their deleterious effects on the economy in his historical account of the Great Depression: http://mises.org/rothbard/agd.pdf
Chapter 7 on...
Yeah all that government money FDR spent, that went to build modern highways, bridges, dams, irrigation systems, electrical grids etc etc, in the 1930s, that was a real waste. You know, the infrastructure thing? Seems like "the market" wasn't interested in the USA becoming a modern country so the government had to do it.
"And thus the Sheeple bleated with much anguish: "But who will build the roooooooads?"
And Santa Claus came forth on his chariot, pulled by eight sturdy reindeer, and said: "It is me, Santa Claus, and I am here to build the roads, since your evil free market will not do it!
"All you need do is just repeat the magic words, and I will pull from my magic piggy-bank the magic planning and funding needed to subsidize your automotive industry and your road builders."
"But what are the magic woooooords?" the Sheeple bleated in unison.
And Santa said: "The good of the many outweighs the good of the few"
And the Sheeple bleated: "The good of the many outweighs the good of the feeeeeeeeew"
And lo did but a whirlwind of magic government pixie dust descend upon the land and magically create roads where there were none before. And the Sheeple cast away their horses, their bicycles and even their legs and all immediately purchased new automobiles from Detroit and drove happily insulated from their fellow Sheeple ever after.
Or see Rothbard's description of the massive government interventions under President's Hoover & Roosevelt and their deleterious effects on the economy in his historical account of the Great Depression:
***********
Exactly-
Governments and their bloody interventions/tariffs etc. -paying farmers to produce less in order to hold prices up while millions went hungry-
As money disapears because it was never there to begin with. As assets are marked down. As things are rehypothecated. As commodities fall. As lack of demand ensues. As LEVERAGE is REMOVED. All things point to gold going DOWN DOWN DOWN.
All things point to gold going DOWN DOWN DOWN.
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What things?
Sounds like you're saying there will be a shortage of real money?
Gold is real money-show us that it isn't and i will show you you're wrong-
The problem. as with Hamlet, is not 'if', but 'how'...slings and arrows of outrageous fortune(s for banksters) or "take up arms".
F@#$ the proud man's Contumely, the Law’s delay, and the insolence of Office.
UNCTAD & Phil, I'm afraid are still Keynesians. WE NEED MORE STIMULUS!!!!!
Yeah, like a junkie needs another hit.
I think Prof. Roger W. Garrison does a nice job of showing why trying to perpetually goose the economy beyond it's natural limits causes far more problems in the long term, in this YouTube presentation of his Power Point presentation to an economics class:
http://www.youtube.com/watch?v=zhoFOyy7rbo
This article left some questions unanswered. But if you really want to connect the dots on where this left you hanging, then reading this might provide some insight. With just a little imagination, you might see the forest for the trees.
http://www.zerohedge.com/news/observations-engineer
2012 is a new year. The Fed does not want a strong dollar. A declining stock market will kill consumer confidence. Ben wants 2% inflation. The needle is pointing towards deflation. I think they will mention QE3 next month. I think metals will bottom in two weeks.
Well if it bottoms then all those in dollars can sleep safe and sound.
Well if it bottoms then all those in dollars can sleep safe and sound.
********
When we see bottom dollars will be good-but gold will be better-
Dow/Gold at 1-1 or even an undershoot 1/4-1 will beat dollars-
"The sun will come out Tomorrow...bet your bottom dollat on it...Tomorrow, Tomorrow, I love you Tomorrow, your only a day away"
either there will be printing..
or the markets will fall by at last 40%!
and the world demand for oil will drop for a good lil while..
My gut tells me Ol' Ben will print because we can't have a strong dollar - my head however, tells me he's painted himself into a corner and can't print without blowing up Japan and China. I think the best he can do (short of global collapse) is buy MBS.
This is an economy that needs real stimulus and all we've done so far is bail out the top 1% (including top Corporations), who had their best year EVER
*********
We don't need stimulus-we need to let failed banks/corporations and bad investments to fail and allow prices to fall to where they can clear and when that happens buyers and businesses will step up to the plate-only then can we begin to recover-
Sentiment favors deflation and Bernanke and 100 more like him cannot change market direction by dishing out money for any length of time-
All they've succeeded in doing is holding prices too high which stymies any real economic growth as spending on necessities sucks money from other areas and money and credit velocity narrows and continues to collapse-
It's paper games boys. Stay the course. Something big cometh our way. War, printing, collapse? You pick. I suspect all of the above. Now IS NOT the time to be selling your gold no matter what the price. I invest in gold not to become rich. But to preserve what I have worked for. Stay strong. Exit the paper games to include mining stocks and buy the phyz with the money. And DO IT NOW!
QE3 is happening as we speak.....it's called the EU bailout. Bernanke is backstopping the world.
And now with the revelation that the housing collapse was FAR WORSE than first reported.....see link....
http://www.cnbc.com/id/45659547
....then domestic QE3 in the form of MBS buybacks are a foregone conclusion.
QE3 by any other name is still QE3.
Even Gold went down....Should we keep pms....or buy dollars?
If you're not sure what to do, do nothing.
In a major crisis, my bet is on gold.
Good chance gold will come out the other end of what's now upon us better than paper or equivalent. I'd guess that if necessary, it'd be able to be usefully exchanged at what ever the going 'street rate' is, and most likely be exchangeable for other value or tokens for less than that, in a pinch. Especially in a crisis. Especially as those who didn't get it before the collapse would now know why it's what it is, and what it's really worth.
Looks like a heads you win, tails you don't loose outcome.
Chose the denominational coin or bar to be an appropriate estimated usage in your community, small for dailies, upsized for asset purchases like a landpiece, 'place of production, and/or self sufficiency'.
Much is made of the 'store of wealth value' of gold, but it's rarely mentioned as a godly metal. The metal of religion and art. I believe that every culture that could, used gold in religion and art. It is a spiritual , very beautiful substance. Religious artifacts, crowns, wreathes, totems of power or influence, and light, angels or halos in Art...
Gold reflects light in a way no other substance does. Gold holds both wealth and value. As a portable store, as a malleable and useful societal metal, as a spiritual gift from nature for our use and benefit. Gold will always endure, and carry with it a measure of endurance.
In the rapidly transitory epoch into which we enter as a species, anything with a high measure of endurance, and/or durability, will maintain a very high worth.
IMHO...Peace