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S&P goes under 1000, BAC fails miserably, que the blank checks from the congress and QE3 to start...it's in the script, what may not be in the script is Ron Paul benefitting from QE3 politically if he plays it right!
"So any move to launch QE 3 is going to be met with fierce resistance. Indeed, the only thing that might permit QE 3 to happen would be for a large bank to fail or a full-scale market crash (S&P 500 sub-1000)."
"So absent some kind of catastrophic event, QE 3 isn’t coming any time soon."
"I fully expect we’ll see the S&P 500 down to 1,000 in short order, or possibly even lower."
How did this get posted on ZH?
BTW SPX 1000 is almost guaranteed, it is 50% retracement of the move up.
The notion that these guys are holding out or somehow are "deciding" when to do what is misplaced. They have no grand plan. Their hands will be forced by the confluence of a deflating Dow and, more importantly, a pullback from Treasuries that threatens yields bubbling up. I don't buy for minute that they know "when", they just know when the pain point triggers the go.
Our economy is in terrible shape now because of borrowing. Too much borrowing can be a bad thing and
lending can be even worse. For example, 6 months ago I lent someone $10,000 to get plastic surgery.
Now I don't even know what he looks like.
" QE 2 was unpopular enough (a record number of Americans say they’re paying more for food today than ever before)."
I seem to recall food prices rising in '07, along with every other price. That would be some time before QE.
I suppose if all Americans stopped eating we could drive the price of food down. For a little while. Food prices are rising because the rest of the world is increasing their standard of living. And that includes eating better. They have decoupled. We don't drive prices at the margin anymore, barring catastrophe.
QE2 causing high food prices is propaganda. Only to the extent that QE2 enabled people to eat a little better than they did before has QE2 influenced food prices.
Or the conversion of corn to ethanol motor fuel could be stopped. Much of the increase in food prices are related to the higher prices of corn caused by fuel demand.
There won't be any crisis because Justice will just jail anyone who says a bad word (ie. speaks the truth) about the current state of our economy.
first Bruce, then this idiot..
#So absent some kind of catastrophic event, QE 3 isn’t coming any time soon.
hey stupid, asnwer 1 simple question
WHO IS IN RIGHT MIND GOING TO BUY ADDITIONAL 2 TRLN $$ OF FEDERAL BUDGET DEFICIT IN 2012 FIN YEAR ?
no more discussion
I believe they will hold off on QE3 or it will be smaller. They need oil prices to drop seriously or else there will be a full blown depression. The only reason the economy improved slightly in 2009 was because oil prices dropped to $33/brl and gas was at $1.80/gal in March 2009. That put more money into the economy than 0bama's stimulus and it didn't cost the government/taxpayers anything.
I still cannot see how the US government's funding needs, >$1T/yr even in their estimate, can be met without the Fed being the purchaser.
Who else has that appetite for US sovereign debt at today's rates?
But if rates rise sufficient to attract a market, the Fed's balance sheet is damaged further, deficits rise dramatically, and the real estate and banking crisis comes back with a vengeance.
That is completely ignoring the politics of the situation.
So what am I missing?
As stated by a previous poster, the Primary Dealers buy US debt with money borrowed from the Fed and pocket the carry trade. ZIRP is in fact QE3.
you dont miss anthing
all those pundits always forget that this ponzi pyramid is still alive because
of depression level of 10% of federal budget deficit ..
4. PPI number today was rather hot. QE3 would ignite serious inflation concerns.
#5. Graham grossly overestimates the American people. Yes, they know they're paying more for food and energy, but 94% of them have no idea that it has anything to do with QE2--WHICH IT DOESN'T.
How's that? Steve Saville charted every single Fed accomodation over the years AND the resultant rise in CPI inflation. He found that the lag is NOT the supposed 6 to 12 months, but rather 18 to 24 months. It takes a lot longer than people suppose for easy Fed credit grants to make their way from the Fed through the Primary Dealers, through the regionals and locals into the consumer economy.
So we're seeing the inflationary results of 2008-9 "liquidity facilities" and of QE1, and maybe QE Lite. The damages from QE2, which began just last November, haven't even appeared yet.
Good insight. Do you have a link?
Bernanke's biggest public commitment right now is to keep interest rates low through mid 2013 (behind the curtain there may privately be other intentions, but, who knows?). As long as market conditions keep driving many investors (aka lunatic fools) to Treasuries Bernanke doesn't need to do anything. It's all playing right into his hand. But, for how long? This is one curious development that I really don't think he has control over. IHowever, if it starts to turn on him he will have no choice but to QE3...n to keep his commitment.
I submit that guaranteeing ZIRP for two more years is a form of quantitative easing. Think about it: The banks know they can borrow money for nothing and the rates will stay near nothing for AT LEAST two more years. That guarantees that the primary dealers have every incentive to borrow free money from the Fed, buy "risk-free" Treasury paper with it and pocket the carry. The game continues, and the monetary base keeps heading off the charts.
For the folks who think the rioting was context-less I suggest you watch this Episode of the Keiser report. The economist predicted all of this in 2009 and it's gonna get worse...
Your point #3 strikes me as utterly specious.
The looters in the UK were completely unconcerned about domestic economic policy. What happened in London and elsewhere was neatly summarized by one social commentator as "shopping with violence".
There have been post hoc analyses from the usual suspects that would seek to attribute the looting to "government cuts". However as has been widely noted, the cuts have not yet been implemented.
I don't deny the possibility that there will be riots in the USA - after all they have happened in recent memory - but the events in England are due to local cultural factors that don't translate to the USA.
Your naivety is breathtaking. Care to consider why there was no "shopping with violence" during the late 1990's? Perhaps it was due to the rising tide appearing to lift all boats. Once the bankers pulled the plug on that poor people came crashing down hard.
At the same time we all watched the bankers steal TRILLIONS worldwide. The common man is dumb, but not that dumb. They are poor and angry at seeing inflation destroy what little they DO have. When theft is done in broad daylight by the bankers at the top of the pyrmaid the proles want their piece of the action as well.
The truly stunning part about the riots is that people like you see it as causeless and in a vacuum rather than a harbinger of things to come. The middle class and lower tier rich more than anyone else should be scrambling to stop the madness of the elite for it is THEY who the poor will come for first in their anger at the rich.
The poor make no distinction between the middle aged man in a late model mercedes and to David Rockefeller and fellow elites flying about in a helicopter. The only difference is ease of access.
The pitchforks are glinting from the light of the torches. Protect the status quo of banker theft at your peril! Yes, I am quite serious. You have seen nothing yet. When the poor get crunched more this series of riots will look like a summerday stroll in the park. The government will get more repressive and the proles will get angrier and then things will get really, really bad.
So, why no burning of Govt buildings or looting of Banks?
QE3 is here already you moron, have you seen TLT lately???? Its pathetic that you get paid to write the shit that you do... http://www.xtranormal.com/watch/12373724/q-and-a-w-slash-with-larry
"QE3" is coming, but in a different way: (ab)using the non-borrowed reserves.
Depends on your definition of, "any time soon".
"both Rick Perry and Michel Bachman have taken public jabs at Bernanke in the last week. Do you remember any Presidential candidate (other than Ron Paul) taking jabs at the Fed in any of the elections of the two decades?"
These zombies are not Presidential candidates. They are just the most ambulatory of the living dead known as members of the Tea Party.
Is it not also a possibility that there was an immediate segue from QE2 to QE3? With all the bad publicity that the 2 QE events had, perhaps the Fed has decided not to announce future 'printings'. I just asked here the other day whether there was a a rule that the Fed had to announce future QEs. No one had any idea. They probably don't. They do make up their own rules, after all.
In so far as QEs down the line are concerned, I think we all ought to be prepared for a classic example of "diminishing returns." Just saying.
In the conditions for more QE, mr Summers comes back to a good reason => a possible bank failure, but he forgets to put this as the most important reason 4: The lack incentives for more QE.
QE1/2 were needed to get MBS of the bank balance sheet for ridiculous prices and to finance the governement stimulus. At this moment the government is in a catch 22 because of the rating agencies/bond vigilantes. Deficits have to be reduced. If they dont do it, US will be downgraded further (also by Fitch/Moodys) causing interest rates to rise sharly sooner or later. The FED/Government have to choose between the bond market (long term solvability/liquidity) and the stock market (short term growth). There is no way they will prefer saving stocks over bonds. Besides, more QE will have only a very limited effect, there is enough cash/liquidity, people/companies just have no incentive to lever up....
Thats all well and good as no QE3 no re-election, three however makes Ben more likely to implement..
I tend to agree with the first two arguments against QE3. The Fed is taking heat for QE1 and QE2 and I don't think they will do QE3 until something fairly bad happens.
I don't see how the UK riots have any relation to QE3. The rioters seem to have been upset about government spending cuts (or perhaps they were just bored). They weren't protesting loose monetary policy.
Inflation is similar in its detrimental effects to austerity for the poor. Couple that with a rampant ethos of plundering by those in the City of London and you have a tinderbox waiting to go up. Throw the spark from police brutality and voila you have riots due to social inequality. I don't condone the riots, but I am not surprised they happen when society allows such intolerable lawless looting...BY THE BANKERS! Trickle down ethos, of course when one steals 10 billion, one gets a bonus, when one steals ten quid, one gets a sentence.
Riots? I don't think so. Ok maybe in the liberal anti-2nd amendment cities and States. Here in Texas we have the Castle Doctrine which allows a person to protect their property and lives.Among other things the 2nd amendment is also a protection for the 1st amendment but looting,burning, and rioting isn't an expression of free speech!
my friend lives in Texas ....riots ,your kiddikg right ....http://i.imgur.com/7oDhF.jpg
Yes Sir! I see you understand "no problem".
The "appearance" of dissent at the Fed is just that, appearance. Bernake as a political weapon, you're correct, he is, but why not weaponize him more greatly in order to create the critical mass necessary to elect the RINO's they need to ensure the illusion of change. As has been previously discussed, there truly is no other option to QE 3. It's the only card, and that card is a mandatory play. The rest is just obfuscation.
Stealth QE3 is upon us, how Ben did it and what it means
that where just british kids who got bored and where looking for some old school fun.
Yes but the banks are still getting "easy free money" from the Fed via their .25% interest on Excess Reserves. With $1.62Trillion in reserves, the banks are collecting $4.0 Billion in risk free money. This rate is higher than the banks could earn by lending money to the Treasury on short-term bills.
The Federal Reserve is in a box and in a mindset in which another round of QE is inevitable.
To a dark place this line of thought will carry us. Great care must we take.
It's treason, then.
if the fed
"is in a box"
tape it shut
mail to tinbukto...
with no return address...
bill me for postage...
This article contradicts itself in saying QE3 is not coming soon and that it would take a bank
failure or S&P crash to below 1000 for it to happen. Yet they fully expect to see the S&P to
go down to 1000 or possibly lower in short order. So in effect, the fact that no QE3 will be
coming soon removes the floor from the market and ushers in a decline in the S&P which
could bring on QE3. Hmmmmmm..... So because no QE3 is coming soon, then QE3 is coming soon.
Nice catch Zorba. Graham is too busy peddling $350/oz gold to subscribers to notice his erronious logic flaw.
#3 UK Riots is so tenuous that it essentially strips all credibility.
I keep thinking Dow below 10k right around Aug26 = most convenient timing. But WTF do I know?
You summed it up well.
QE3 will come because it has to. But we all know the conditions that have to be met that will allow it. The S&P at 1200 is still too high.
The other condition is that politicians - maybe even public - ask for it, one way or another. The FED tipped thier hand to this quite some time ago saying that further stimulus would not be done unless the Fed was forced.
Theoretical path is... financial crisis = soveriegn crisis = political crisis = currency crisis. Stage 3 is warming up nicely and playing right into the trap.
...or Catch-"44", as the case may be...
QE is coming back, and maybe it never stopped. They learned not to play it up so much. Seriously, without QE every bank goes bk -- do you think TPTB will allow that? Oh, but a minor fed mouth piece is out sounding off. Yeah, right -- I believe!
Bad call phoenix research.
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