Goldman: The Ball Is Now In The Fed's Court

Tyler Durden's picture

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The Count's picture


The cat is out of the freakin' bag, and neither the Bernank nor the Rompuystilzchen or Trashet will get it back in.



A Lunatic's picture

Not only that but it went feral, mated, and had ten trillion identical twins.

tictawk's picture

Humpty Dumpty fell off the wall, all of the Kings Men.... couldn't put humpty dumpty together again...

Japan and China are going to realize that holding bonds is a losing proposition and it could be a race to the exits.  This simply means long rates will skyrocket and if it becomes a stampede, lending will cease, unless the Fed assures the market that it will NOT monetize, which means that the dollar skyrockets, and defaults on unpayable debt will be the rule.

S&P stated the obvious, "the emporer has no clothes"

Temporalist's picture

Mars.  Needs.  Women.

Troll Magnet's picture

China needs women more than Mars.  

narapoiddyslexia's picture

As opined by Bandon Smith in the last post on this site, it seems reasonable to think that QE3 will be the end of the US. We are expendable.

tictawk's picture

There is a lot of DENIAL because the status quo want to patsies to continue to LEND ad infinitum to a borrower who has no control on spending.  The first rule of HOLES, "when you find yourself in one, stop digging", similarly when you find yourself in too much DEBT, stop borrowing"...

The nation is living beyond its means and it is about to find out that "YOU CANNOT PRINT WEALTH"... you can print pieces of paper but WEALTH has to be EARNED.  Thus any attempt by Bernanke to PRINT, will be met with a pushback from all the lenders past and present in the form of a rush to the exits.  The jigs UP, and the unwind will not be pretty. 

What the markets do on Monday won't matter in the big picture.  Prices were inflated by PRINTING.  You cannot print VALUE.  Value is created via effort and hard work.  I expect the tumble in the markets and the wipeout to seek REAL value.

happy trading

tom a taxpayer's picture


My "baseline expectation" is for Dudley and FOMC to continue to take dictation from Goldman Sachs.

My "baseline expectation" is for AG Holder and State AGs to continue to allow the Wall Street and Fed RICO criminal enterprise to rape and pillage taxpayers, pensions funds, widows and orphans.


Ahmeexnal's picture

GS about to be listed as a terrorist organization, along with S&P.


Expect Tottenham inspired riots to erupt in Wall Street.

DeadFred's picture

We will have exciting times soon, there is no doubt.

Tyler I hope you have at least quadrupled your server capacity because you are about to become the go-to source for a lot more people than us core ZH groupies.

Caviar Emptor's picture

Not only is it a tight spot for the Fed, caught between a rock (deflationary collapse) and a hard place (inflationary depression) but they only know how to print. PLaying games with the yeld curve, Operation Twist2 all involve more printing. But the benefit all goes to Wall Street and Corporate Welfare Queens and their politician buddies. None is going to trickle down, especially since it's abundantly clear now where this is all heading. Cash on the balance sheet at corporations will stay there. And cash in wealthy people's pockets will get hoarded and parked in Switzerland. 

chinaguy's picture


"But the benefit all goes to Wall Street and Corporate Welfare Queens and their politician buddies. None is going to trickle down"

Pretty much 100% correct, but it never has trickled down, it's always been lining the pockets of the plutocrats.

And, the Sheeple are not upset enough YET to stop the next QE...and China can bluster, but they need our market.

So, I'd say yeah, the plutocrats want QE3 & the masses are not going to stop them, this time.



Caviar Emptor's picture

I agree. The coffee is brewing, the masses haven't woken up and smelled it yet. But it's inevitable now that the pot is on the boil. 

But the world the plutocrats built is slowly burning down: one country at a time (Syria, Egypt, Tunisia, Yemen...). The entire Mediterranean basin is a powder keg. So are the Balkans and Eastern Europe. So is South Asia. And yes, the Persian Gulf. We are nearing the point of no return for the plutocrats. Best they can hope for is to ride it out somewhere behind gates and barbed wire. 

kito's picture

'the masses havent woken up and smelled it yet'---understatement of the day caviar---and for the daily google "hot trends" update:


1.elisha cuthbert2.maplestory3.vindictus4.deion sanders5.the girl next door
                                                 6. powerball 7. michael 8. valkyrie 9. man u 10. joel osteen

tictawk's picture

Yeah the Fed is trapped because there is a $6 TRILLION counter in the form of overseas debt that has the potential to be DUMPED on the market should they decide to print.  We live in the age of instant information and Japan and China are not going to sit on their asses and pretend all is well.  There will be a race to the exits as they try to off load their stash of trash er... bonds. 

Printing is NOT a given.  All your hyperinflation expectations may be dashed and we in fact may have a spate of DEFAULTS. 

youngandhealthy's picture

The question is now: Is it ZH opinion that matters?


Well done ZH

Milton Waddams's picture


digalert's picture


Don't know what to think...

the Kenya born teleprompter/Barama hasn't spoken on S&P.

slaughterer's picture

ZH: all the news that is fit to frighten the fuck out of you.  Thanks, Tyler, for keeping it real.

Arch Duke Ferdinand's picture


Learn why America's younger generation has no Protesters!

Eight Reasons Young Americans Don't Fight Back: How the US Crushed Youth Resistance

"""The ruling elite has created social institutions that have subdued young Americans and broken their spirit of resistance....."""


Experts: Fukushima 'off-scale' lethal radiation level infers hundreds of millions dying.

"""Fukushima nuclear power plant radiation recordings of external gamma radiation have been so high this week, they went off scale said veteran nuclear expert Arnie Gunderson on Thursday after the famous physicist, Dr. Chris Busby told the Japanese people this week that radioactive air contamination there now is 300 times that of Chernobyl and 1000 times the atomic bomb peak in 1963, possibly inferring that hundreds of millions of people are now dying from Fukushima radiation, including people in the United States...."""

OT: hilarious 2 min video

upside down...

Caviar Emptor's picture

Buffet says America's rating is still  AAA in Omaha. Cramer says stay in the market. Wall Street guys say it don't matter a bit, because we knew. Politcians say we'll get AAA back fast. One financial site says this is 2004 all over again. 



Can you spell denial? It's how we slid down the shit-hole to start with. But now that so many powerful people gorged themselves on bailouts, QEx.x and other "gifts" from the taxpayer, they have very little incentive to fix things, and their personal level of concern is appropriate: what, me worry??

Hulk's picture

Spot on Caviar, this is utterly amazing to behold...

The Count's picture

About time the Asshole of Omaha finally out himself as the greed, seedy bastard he really is.

Stuck on Zero's picture

What a bunch of statist drivel from GS.  Inflation 2%.  Slightly reduced growth.  Supply disruptions.  Garbage.  What is GS doing secretly in the background?  Who are they paying in Washington to execute what marching orders?  All of this financial pontification is window dressing for the masses. 

buzzsaw99's picture

I love how they use their continuing impoverishment of the nation as an excuse to steal more.

teolawki's picture

Prepare to be "gang banked" again.

Spitzer's picture

The list of reasons for the weakness is a list of bullshit.. The reason the economy is weak and will be many quaters to come is because no debt has been purged from the system and no creative distruction has taken place.

Raise rates and force some creative distruction, that is what Volker did. But its too late for Austrian style solutions. Now that the keynesians have blown the deficit through the roof, raising rates will bankrupt the US govt, the fed, everyone, so we are all doomed to destroy the currency.

Quinvarius's picture

Volcker didn't do anything but wreck the economy.  The price of gold rose to where the US could have backed the dollar and our debt again.  That is what saved us, not Volcker.  The Fed and the government just really wanted to take credit for the end of a cycle their screw ups caused.  It is like the Nazi's claiming they won WW2 because they happened to be there when it finally ended.

disabledvet's picture

absolutely. i disagree with raising rates too. monetizing the debt is REALLY odd too! it's soaring in value of it's own accord and obviously no one now can claim "the Fed's doing it" as I had been doing for years but stopped saying that this spring after listening to Jimmy Cramer and his beautiful back and forths with the beautiful Erin Burnett oh those many years. Now that we KNOW this we can conclude "failure to clear markets" is the problem and not inflation at all. In effect asset prices are massively over-valued and until the market is allowed to "hit the reset button" the...liquidation...only grows more severe. We know this now and therefore have been warned since interest rates in the strong euro/no inflation european union have gone "cataclysmic." the key under the USA variant is not a drop in the dollar but a sudden SURGE in the dollar. that will be the signal of steep in preciptious decline in prices is in the offing and in particular real estate as well as some type of "credit event." the "delivery option" as the precious metals folks like to call it or as bankers like to call it "the check is in the mail" scenario. Congress can only move so fast--even if a value added tax were passed this December I would imagine getting such a complex system up an running would truly be a Herculean task. Methinks a little of the more "old fashioned type" repression might be in order here--just to keep the crazies in the media "under wraps" as they say.

Die Weiße Rose's picture

who cares ? QE2 never really finished

the Fed has been busy re-investing only last Thursday but the market still tanked:

Operation 1 - RESULTS   Operation Date:   08/04/2011 Operation Type:   Outright Coupon Purchase Release Time:   10:15 AM Close Time:   11:00 AM Settlement Date:   08/05/2011 Maturity/Call Date Range:   02/15/2017 - 07/31/2018 Total Par Amt Accepted (mlns) :   $3,317 Total Par Amt Submitted (mlns) :   $10,605
Wolferl's picture

AA+ means no QE3. Get it.

automato's picture

The bottom line is if you subscribe to belief in "Animal Spirits", then WE ARE SCREWED! You can try and talk your way out but losing AAA is the absolute WORST thing that could ever happen in a Universe where "Animal Spirits" are the paradigm. It is the economic equivalent of a stockbroker jumping to his death from a Wall Street window. So everyone, everywhere better hope and pray that Keynes was an idiot.

Caviar Emptor's picture

The imbalances created by reckless monetary policy for the last 30 years are now reaching critical (it's not just QE and the programs since 08) . There are ripple effects being felt all over the world. Like losing control of a nuclear power plant. The irony. 

Cult of Criminality's picture

When financial markets are having a Epic Fail moment and all the screens are red with blood there is no better listening than to music of epic proportions like when dark metal meets symphony and opera.

 I call it symphonic operatic metal.

 Therion goes classic.The rise of Sodom and Gemorrah

or Blood of Kingu

I kinda like female violinists also

Therion kicks ass. They have had many female & male singers all of which do a fantastic performance.

Markets can tank all they want I,will not hear about it just watch the big show on the screen see whats up on ZH and Jam (after my regularly scheduled workday however.Our helpers pretty much stand around and text all day so staying updated will not be difficult.

Cheers and tidings of joy to all

Everybodys All American's picture

QE3? The Fed will have their hands full with European swap lines.

A shaped recovery's picture

Steve Liesman and John HARDwood are foaming at the mouth to inform the masses of Helocopter Ben's next move.

gwar5's picture



ZH is right again. 

Except for meaningless timing quibbles, I don't remember any wrong calls.  The ZH campfire continues to be the go to place to find out what the all important economic deciders are going to do. ZH Squatter, Bitchez!

digalert's picture

Hold the phone,

China’s top rating agencies says...

“international supervision over the issue of U.S. dollars”

Uh oh Ben, they think you need a supervisor.

Cult of Criminality's picture





Off to donate.................Fiat not body parts sorry guy`s got to keep the PMS

jmc8888's picture

Fed doesn't have political or social cover for this.  Everyone is still pissed off about QE1, 2, etc. If they do it, there will be a heavy price to pay.  What that is, who knows. 

So to me that means there is a possiblitiy that we'll see a rouge wave within the perfect storm, and no QE3 announcement August 9th.

The fed would obviously prefer to avoid a systemic move, but they don't have the cover.  They need to wait until the POLITICIANS, namely white house and congress, tell them to print.  Anyone think they are going to do that? 

Fire timmy calls aren't making it any easier. 

It will take a big downturn, unless someone convinces NERO between now and then.  I don't think a huge drop between now and the 9th is enough for the politicos to do it.  They aren't that bright.   When you use useful idiots, they sometimes screw up in other ways.  This I suspect will be one of them.  Even if the entire thing is stupid, fools aren't always down with the game, and it takes something big before they come back running and screaming.  

Goldman better hurry up and decide what they think, because the Nero and congress (as stupid as they are) only have a couple of days to digest it.

So if everyone is pricing in QE3, and it doesn't happen, along with downgrade, efsf,etc...say hi to Jack Dawson and the rest of the damned on the TItanic.

But who knows what will happen when the black swans are all around clusterfucking.  Anything can happen. 

Of course, what should happen, is Glass-Steagall

vast-dom's picture

jmc i concur with you, though for slightly different reasons. I suspect Bernank et al will allow the markets to tank hard and long(er) and when everyone is in panic mode (including the populace), then they will be under the cover of hysteria. If they do it on the 9th, then there is more room for massive dismay and the printed monies are in ineffectual in very short term Fed gets a double-whammy blame.


So I think end of August at Jackson Hole will be better timing. At that point the DOW should be flirting with 9,500 bogus accounting fraudulent jobs #s and fudged stats notwithstaning. 


(And if the jobs #'s of Friday weren't totally cooked we'd have DOW at 10,800 range.)


TruthInSunshine's picture


Fed doesn't have political or social cover for this.  Everyone is still pissed off about QE1, 2, etc. If they do it, there will be a heavy price to pay.


I don't think it's much of a possibility that Bananas&BubblesBernank doesn't do more QE - as many have accurately (IMO) said, "print or die" is the choice of Bernankstain.

The real question now is what happens in the wake of more QE.

Will insiders sell the news (there's not much retail participation in equity markets, so maybe Bernank can buy all LULU and PCLN shares with the rest)?

Will the Fed be able to avoid self-implosion or will it get a U.S. Taxpayer bailout?

Will QE3 be a program that allows Bernankincide to buy up all underwater mortgages and donate them to the JP Morgue & Goldman Sachs?

Maybe Bernank will use QE3 to buy PIIGS+UK+French debt, and then he'll do something magical with it.

Any way you look at it, NerObama & CONgress now have 2.6 trillion worth of treasuries that Bernank-Whack-A-Mole can buy up, and the rusting, oxidizing, turning-to-dust tin can gets kicked, or someone's foot passes right through it, vaporizing it.

This could all be the big prelude before some large events take place.

One thing is for certain; whether by design or accident, faith and trust in the honesty, competency and/or sensibility of the U.S Government & The Private Federal Reserve Bank is being lost at a pace not seen in anything other than TSHTF types of times.

vast-dom's picture

Okay gentlemen let's discuss the following points:


1. will the Fed announce QE3 on Tues? 

2. when Fed does announce, will markets instantly (un)correct UP or will there be a lag until QE actually commences?

3. will QE be instantiously implemented?

4. what do you believe is the timeframe until QE runs out and we have massive market CRASH?


Of course all answers are to some extent speculative, but would love to read 0Hedgers thoughts.

tictawk's picture

This is bullshit... you are making the ASSumption that the markets still believe that QE works and that you can print wealth.  Printing paper is not the same as creating wealth.

vast-dom's picture

Tick the ASS is precisely the Sheeple that WILL 110% go for the bait until it don't work. Not ASSumption but GIVen. If you don't believe, then YOUR ASSumption shall be proven wrong shortly.

silvertrain's picture

Any more QE will be an additional 2 notch downgrade on the US credit rating..Go for it...

vast-dom's picture

Yes but if you factor the previous 2 we are already in FFFF ratings category. SP is just legitimizing their fraud by finally seeming to do something, irrespective of how grossly off the revision is.

holdbuysell's picture

Tyler, from the artice above (cut and paste):

“…are likely to warrant exceptionally low levels for the federal funds rate and exceptionally large asset holdings for an extended period” (our suggested change in italics). Indeed, our baseline expectation is that this change will occur at the August 9 FOMC meeting, although it is a relatively close call. Second, we expect the composition of the Fed’s balance sheet to shift toward longer maturities. This could happen via an increase in the average maturity of its reinvestment of MBS paydowns and/or a change in the reinvestment policy for its Treasury portfolio. However, we do not yet expect this for the August 9 meeting, although it is possible." Operation Twist 2 it is then, with unlimited purchases in the 2-7 year range to keep the yield at a sturdy 0%,...

I don't see in that statement from GS that the Fed is increasing the size of the balance sheet in the 2-7 years. I see a reinvestment in those areas. This doesn't sound like adding to the balance sheet, but merely shifting the mix and keeping the size stable. Please clarify.