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Goldman Presents The Three "Radical" Measures The Fed May Engage In To Turbocharge An Imminent QE3
Goldman is not used to being snubbed when it comes to its policy recommendations. Which is what essentially happened during the Jackson Hole speech in which Bernanke left the QE3 door slightly open... but not enough to appease Bernanke's Goldman alum superior at the New York Fed. As such, since at least a few days have passed without Goldman reminding of who calls the shots, here is probably the most comprehensive summary of the Jackson Hole aftermath, and what the market will now expect to come out of the Fed on September 21. Whether Bernanke will go ahead and listen to Goldman, is unknown - the Fed risks incurring the wrath of Goldman at its own peril. What is perhaps most interesting about self-Q&A are the Goldman proposed "radical" measures that the Fed could consider to employ in addition to LSAP and Twist which so far have proven to be ineffective: "There are three main ways in which the Fed could be more radical: (1) an extension of the QE program into markets other than Treasuries and agency MBS, e.g., private sector securities, (2) a much bigger QE program, up to the extreme version of a promise to buy as many securities as needed to hit a specific yield target (i.e. a "rate cap" further out on the yield curve as then-Governor Bernanke suggested back in 2002), and (3) an explicit or implicit change in the Fed's policy targets." If these are truly hints as to what the Fed should do, then we hope readers have their gold $3000 calls firmly in place.
That said, to end once and for all all ridiculous debates over what is and what isn't QE3, here is Goldman with the most spot on definition of what further easing is and will be: "One final note on terminology: for simplicity, we have decided to label as "QE" any program of large-scale asset purchases that removes a significant amount of duration from the market, regardless of whether it is financed by creation of excess reserves or sales of short-duration securities. This is a little sloppy, but we believe that the economic distinction between the two modes of financing is so small--and the term "QE2" is already so well established--that we want to refer to them with the same basic term." Hence people can stop referencing momentum chasing FX traders in attempting to make their case of why Operation Twist is not QE3.
Q&A on Monetary Policy after Jackson Hole
Q: Will Fed officials ease monetary policy further?
A: Yes, we think so. At this point, we believe that the majority of the FOMC expects real GDP growth of around 2.5% in the second half of 2011, and perhaps 3% in 2012. As a result of growth that averages a bit above trend through the end of next year, the committee "…anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate." Our own expectation is that real GDP growth will average nearly 1 percentage point below the committee's likely forecast and that the unemployment rate will go sideways to slightly higher. If we are right and the committee ultimately reduces its growth and employment forecast accordingly, we think that this shift in view will be accompanied by further monetary easing.
That said, additional easing is not a certainty. Following Monday's better-than-expected personal spending report for July, it looks like real GDP in Q3 may come in a bit stronger than our forecast of just 1% (annualized). Moreover, inflation has continued to come in on the higher side of expectations, and the "hard" economic data for July have been stronger than anticipated. If growth and inflation exceed our forecasts, additional easing would become less likely.
Q: Should Fed officials ease monetary policy further?
A: Yes, we think so. The US economy has a large--and probably increasing--amount of excess capacity, at a time when fiscal policy is already primed for restraint. Thus, the risks to the attainment of the Fed's dual mandate of maximum employment and low inflation are clearly tilted to the weak side at the current stance of monetary policy, which implies that further easing is a natural expectation. Indeed, our QE-adjusted Taylor rule--which is based on the Fed's past response to unemployment and inflation gaps as well as our estimates of the effectiveness of unconventional monetary policy--implies a need for additional easing equivalent to a cut in the funds rate by around 200bp.
There are two main arguments against further easing, but we don’t find them very compelling. The first is that "QE2 didn't work, so why should QE3 be any better?" We disagree with the view that QE2 didn't work. It is true that QE2 failed to ignite a more powerful recovery. However, we would attribute this to the combination of an even more adverse "baseline" pace of growth than we (and the Fed) had expected, and to the increase in oil prices. Moreover, our commodity strategists believe that most of the increase in oil prices was due to the tightening demand/supply situation in the oil market, exacerbated by the turmoil in the Middle East. Our belief that the moves in oil prices have been mainly driven by supply and demand rather than monetary policy is also consistent with the easing in oil prices over the past few weeks--a period in which the economic indicators have deteriorated and expectations of QE3 have grown.
The second argument against further easing is that most of the problems in the economy are not easily addressed by monetary policy but require either fiscal solutions or simply time. We agree that monetary policy is unlikely to be very powerful, but we do think that it would add a few tenths to GDP growth and would not have significant costs in terms of inflation given the large amount of slack in the economy (see "How Much Growth Boost to Expect from QE3?" US Daily, August 24, 2011). Ultimately, the question whether to ease is a cost-benefit calculation, and the benefits exceed the costs in our view.
Q: If it happens, what form will the easing take?
A: In his recent monetary policy testimony, Chairman Bernanke noted three ways of providing additional stimulus: (1) more explicit guidance about future policy, (2) changes in the size or composition of the Fed balance sheet, and (3) a cut in the interest rate on excess reserves (IOER) from its current 25 basis points (bp).
By stating their expectation that the funds rate will stay exceptionally low until at least mid-2013, Fed officials have already gone as far as they are likely to go with respect to (1). Moreover, while a cut in the IOER as per (3) is possible, it is unlikely to have a sizable effect given that the effective funds rate is only 8-9bp at present. This leaves (2) as the most straightforward option. Specifically, our current baseline expectation is a renewed asset purchase program that removes a similar amount of duration from the marketplace as the QE2 program announced last November. However, we think there will be some "tweaks" compared with QE2 that would be mostly designed to reduce the potential for "backlash" against the Fed at home and abroad. One possibility would be to finance the asset purchases via sales of shorter-duration securities as opposed to the creation of excess bank reserves (see "For More Easing, Will the Fed Go Big or Go Long?" US Daily, August 15, 2011). The advantage is that such a "twist" does not imply another controversial expansion in the Fed's balance sheet. Another possibility--not necessarily mutually exclusive--would be to announce not the ultimate amount of purchases but only a "run rate" that is reevaluated at each FOMC meeting and remains in place until further notice.
One final note on terminology: for simplicity, we have decided to label as "QE" any program of large-scale asset purchases that removes a significant amount of duration from the market, regardless of whether it is financed by creation of excess reserves or sales of short-duration securities. This is a little sloppy, but we believe that the economic distinction between the two modes of financing is so small--and the term "QE2" is already so well established--that we want to refer to them with the same basic term (see "QE2 as a Shortening of Treasury Debt Maturities," US Daily, October 25, 2010). (We draw the line at an increase in portfolio duration that is effected only through the reinvestment of MBS paydowns; we do not call this QE.)
Q: What assets would they buy?
A: Probably mostly longer-duration Treasuries. To be sure, the recent widening in agency MBS spreads has somewhat raised the probability that Fed officials might go back into that market, and a further widening could raise it further. It is also possible that MBS would be incorporated into a possible "twist" via sales of high-coupon securities (which have relatively short duration because of a higher probability of refinancing/prepayments) and purchases of low-coupon securities (which have relatively long duration). However, we think the hurdle against duration extension in the MBS market is relatively high because Fed officials remain determined to return to an all-Treasury balance sheet in the longer term. An increase in the stock of low-coupon securities that may not roll off the balance sheet for up to 30 years would make this process even more challenging.
Q: What is the timing?
A: The key question is what happens to the FOMC's forecasts. We suspect that the current forecast is not yet weak enough to lead to another big easing step, on top of the substantial change in forward-looking language at the August meeting. Based on our forecasts for the near-term economic data--including a 50,000 gain in nonfarm payrolls, a flat 9.1% unemployment rate, and a 48.5 ISM--we also do not expect a large downgrade in the forecast. As a result, our base case for September 20-21 is for the FOMC to state its intention to reinvest MBS paydowns at the longer-end of the Treasury yield curve, but only to signal the possibility of a larger program at a later date.
However, this is a close call. For one thing, our assessment of likely changes in the FOMC forecast could change in response to new information about the economy, including substantial disappointments in this week's economic data. Moreover, it is possible that the FOMC leadership has already decided to take another big step but is still building the internal support (we noted this possibility just after the last meeting; see "QE3 Now Our Base Case," US Daily, August 9, 2011). But our best guess is that a big step will only come a bit later.
Q: Does the Fed have more extreme options up its sleeve?
A: Yes, but the hurdles are very high, and a more radical approach is unlikely unless the economy and/or the financial markets perform substantially worse than we are forecasting. There are three main ways in which the Fed could be more radical: (1) an extension of the QE program into markets other than Treasuries and agency MBS, e.g., private sector securities, (2) a much bigger QE program, up to the extreme version of a promise to buy as many securities as needed to hit a specific yield target (i.e. a "rate cap" further out on the yield curve as then-Governor Bernanke suggested back in 2002), and (3) an explicit or implicit change in the Fed's policy targets.
Regarding (1), the general understanding of the Federal Reserve Act is that it does not allow purchases of assets which could result in an outright loss for the Fed. Therefore, a purchase of private sector assets such as nonconforming mortgages or corporate bonds (let alone equities or real estate) almost certainly requires funding from Congress, which is unlikely to materialize unless the level of distress in the economy or the markets rises sharply.
Regarding (2), while our base case is a QE program that removes a similar amount of duration as QE2, a bigger and bolder approach is certainly possible. The bigger the program, the more likely it is that it would ultimately need to involve a sizable expansion in the Fed's balance sheet because the scope for a "twist" reaches its natural limits. However, the limiting case of a "rate cap" would again require an extreme situation. Fed officials would undoubtedly worry about the tail risk that they might need to buy up the entire supply of securities in the targeted sector to make good on their promise.
Finally, regarding (3), we have again received some questions about the possibility that the FOMC might move to a nominal GDP target (see "The Fed Discusses Easing Options," US Daily, October 12, 2010, as well as this week's Economics Focus in The Economist). It's important to note that depending on the interpretation, the Fed's dual mandate (in which policy responds to both employment/real GDP and inflation) already has some similarities with a nominal GDP target (in which policy responds to the product of real GDP and the price level). The key differences are that (1) an announced nominal GDP target is much simpler and therefore more powerful than the hazier dual mandate, which is interpreted differently by different people; and more importantly, (2) the dual mandate is defined in terms of rate of change of prices, while a nominal GDP target depends on the level of prices. (There is not such a clear distinction with respect to the employment/real GDP component, which is typically understood to refer to levels in the dual mandate definition as well.) The implication is that a nominal GDP target, Fed officials attempt to "make up" for past undershooting of inflation via future overshooting. In other words, a move to a nominal GDP target is tantamount to a temporary increase in the inflation target. We believe that the skepticism expressed by Chairman Bernanke's in his 2010 Jackson Hole speech still applies, and do not expect a move to either a higher inflation target or a nominal GDP target.
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"Goldman is not used to being snubbed when it comes to its policy recommendations."
How would they feel about the wrong end of a pitchfork...
EOY 2012 $3000 Gold. See you there.
Indeed.
Full disclosure: long pitchforks, short patience.
Who are they kidding?
There will be pitchforks before any of their central capital commisar national socialist wet dreams come true
Vampire squid fantasy: 0
Reality Fact Check: 1
Are you kidding? The world's largest investor - The US FED - will buy all the stocks in the world, with its endless supply of monopoly money - and it, The US FED, is a PRIVATE entity - not socialist or government controlled.
Furthermore - US'ians at large have no clue how to hold a pitchfork - let alone spear or kill anything.
There will be QE3 - and there will be US collapse. Watch the US "union" crumble over the next nine months.
Good thing I have a hatchet, sickle, corn knife (looks like a machete), handsaws, hammers, and chisels -- for all those that are "pitchforkally-challenged"! Would you like a chainsaw instead? :>D
flash crash bitches!
Holy money printing batman! Pass me the "Fed Go Away Spray" quickly!
Goldman have been wrong so many times (Oil to goto $250, SP500 to 1450, GDP to 5% etc. etc.) why does anyone in their right mind listen to these imbeciles? Reading Wall St. 'research' is about as instructive as reading your daily horoscope.
I beg to defer on the call on "Oil to 250." They may not be on the right side of the call in public, but I think they WERE on the right side of the trade. If you see a penny on a pile of shit, Goldman would be there to scoop it with the tongue.
Your horoscope isn't trying to sell you something ...
"Predicting anything is hard, especially the future!" -- Yogi Berra
If you're gonna predict the future, predict often! :>D
expand qe in to agency mbs? are they insane?
it's worse than that. read it again.
hehe. Of course GS talks about more QE. All the Fed QE-style programs funnel money through Wall Street first, and then they're supposed to trickle down to the general economy through the "wealth effect". We saw how far that got us in 09-11. There's nobody left to Trickle! through the stock market. The paradigm has shifted. And the Fed knows it. We're going to get big fiscal stimulus not monetary which has already not only failed but made the situation worse through biflation.
What's the point of owning a central bank if you can't use it to juice your bonus pool by a couple bil. when the peon politicians need to appear to be doing something, thus slowing the pillaging. Oh yeah, nobody knows who owns the fed, so saying that they have anything to do with GS or JPM is just conspiracy stuff. And saying that QE has anything to do with commodity price rises, well I may as well just label wall st and the fed as al-QE-da because I obviously cannot comprehend 'Gods work'.
I guess I am not surprised how NON-radical Goldman's three radical ideas are. They are just more of the same and seem very self-serving on Goldman's part, which puts them more in the position of "beggar" than "master of the universe".
Goldman is a "has been". It is a "used-to-was".
YAWN ... wake me when a banker says something intelligent.
"wake me when a banker says something intelligent"
LOL. Enjoy your nap Rip Van Winkle.
The problem we have is if you are going to run a Ponzi scheme, you need someone with some qualifications and experience. And what do they do? They throw the most qualified man on the planet in jail. WE NEED BERNIE MADOFF FREED SO HE CAN RUN THE TREASURY FOR THE SAKE OF NATIONAL SECURITY. Its our only hope.All we have is someone how uses Turbo Tax to file his taxes. ROOKIES.
Bernie has had an unmentioned advisory relation with the FOMC and Treasury for the last 2-3 years. They put Bernie in prison so that he can concentrate on his research for the US government better.
There is no way out Bitchez! Got Gold?
Radical step 4:
Congressional lifetime ban on Goldman Sachs or JPMorgan employees working in any executive branch agency or the Federal Reserve.
Radical step 5:
Continuous wiretaps and documentation of all communications between GS/JPM and executive branch/Federal Reserve system. Civil and criminal penalties for 'live'/unmonitored communications.
Step 6: Declare the 15 largest US banks terrorists.
No way will this end well. I'm at a loss for words ...
This train is going to hell. It is of little comfort, that we're traveling in the first class.
And we have all been led to believe the FED is independent!
It depends on what the word independent means?
It depends on what your definition of the word "is" is.
<---- QE3 Sept20-21
<---- QE3 NOT
Vote biyatchez!
vast-dom, I have consistently voted for QE3 as our imminent reality every since you started these polls. It is pretty much assumed that QE will continue through to the end of 2012, if not till middle 2013. It was amusing for me to see so many vote "QE3 NOT" last week and so many vote "QE3 Sept 20-21" today. While Goldman may lie, gold does not lie, nor does Michael Burry, Marc Faber, Jim Grant, et. al.
Who's going to buy the revolving Treasury debt if they don't do QE3? I think they are stuck on this through continued inflation until system failure. They'll inflate and milk it as much as they can until the system fails.
So the squid is talking to itself now?
http://www.youtube.com/watch?v=WgOIEGz7o_s
No one else will listen to it anymore.
To me it looks like they are grovelling at the Fed's feet for more QE.
i don't think they need qe3 as much as they need to maintain the expectation (or even buzz) of qe3 - then if need be they can short the market (while promoting long position)
Get ready for the crime syndication to take this stock market much lower. That is the only way they can get the fed to move to a more radical QE3 program. The trigger will come on September 7th when the German Court says no more to the buying of PIIGS debt; it violates the EU charter and Germanys sovereignty.
Gold will hit highs never imagined as the compliant liars in the media help the banking gangsters engineer another transfer of wealth from the sheep to the butcher.
Fuck GovtSacks I hope they go under and get ruined in the courts, they are a courrpt group of greedy bastards.
I vote for giving everyone a Fed debit card, fastest way to get people to spend.
The buying of MBS comes from the Obama administration wanting to refinance everyones underwater home. Who else would step in to such a mess other than Bernanke. This would take all of the banks toxic assets over to the fed. We are truly f'd.
Efficient market? Biggest bullshit in the history of markets.
Rigged market? Answer: yes.
"Radical"? Dude, gnarly. 2.5% GDP for 2011?! Hahahahaha.
Did they import weed from Vancouver to Jacks Em Whole?
"Moreover, our commodity strategists believe that most of the increase in oil prices was due to the tightening demand/supply situation in the oil market, exacerbated by the turmoil in the Middle East. Our belief that the moves in oil prices have been mainly driven by supply and demand rather than monetary policy is also consistent with the easing in oil prices over the past few weeks--a period in which the economic indicators have deteriorated and expectations of QE3 have grown."
this is the lie that is in the middle of it all.. they know better. they say qe was unrelated to the increase in oil price, that it was rather the result of unrelated 'turmoil' in the middle east. zh rightly points out that there is a clear causal relationship between qe and middle east turmoil via the exportation of inflation. i take one step further, and maintain that destabilization in the middle east via exportation of inflation was an INTENDED consequence, on that sets the world in a very definite direction... one that was disclosed over 100 years ago by albert pike.
pike to mazzini 1871: "
KKKrackhead.
what we are witnessing is a gambit for world domination. the scope of the current crises goes far beyond finance. you dont need albert pike to see this... just look at the 20th century. the magnitude of this financial crisis REQUIRES a global war.. i guess it is just a matter of how many moves ahead on the chess board you are willing look.. i think the pike letter gets pretty damn close to describing the world we live in, no??
lol! right on cue!!
http://www.zerohedge.com/news/israel-sends-two-more-warships-egyptian-bo...
pike knew about nazis in 1871?
hitler, the thule society, and the occult.. good reading:
http://www.cephasministry.com/nwothule.html
The excess capacity argument is retarded. It shows no understanding of the relationship between production and utility. All these people understand is growth, even if that growth is malignant.
As usual, Goldman proposes what is good for them without any thought to the Unwashed Masses. If the Fed really did what GS proposes, pretty much the entire developing world would go up in flames due to food riots. China and India would have no choice but to retaliate with whatever means until the Fed stopped the turbo-QE policy.
Only the final tool is missing: Ben flying with the helicopter from the REdwood Forest to the Gulfstream's waters throwing $100 bills out of the window...
get ready for the fucking massive pump. s&p is going to hit 1256 for this bitch is up.
ride the fucking pump bitchez.
I am sure the Fed will try everything possible until such point as the realization dawns, that finance and economics do not an economy MAKE, they are merely tools to fine tune it. They may create MONEY, but money is not wealth. Create too much of it and all you see is inflation in things people want and need, and devaluation of the assets of those whose wealth was converted into money, that is savers.
This will continue until people realize that both governments, and central and other banks, are not agents of production of wealth, but purely parasitical functions whose massive importance is only justified if they are indeed aiding in the production of common wealth: The moment they cease to actually do that, they are economically valueless.
One wonders when the population of the US (ZH population excepted) will realize that "economically valueless" point?
You know you're in trouble when your FRNs are worth less than these...
The Fed isn't going to do anything. It is irrelevant.
Bernanke is likely to quit, soon. His money laundering operation is near its end, gold and silver markets do not allow the sorts of swaps of bad paper for cash that the stock and bond markets allow.
Bernanke has bought outright trillion$ of money losing securities, what were the GSE non-recourse purchases?
Private market swaps of trash for Treasuries by primary dealers made up QE2.
Loss of discipline on the part of market participants leaves Bernanke with little to provide 'stability'. He could offer markets good dollars for worthless derivatives but not all markets all the time. Time has run out.
Sold to you Steve. I'll take the other side of that bet. If there is one thing that has been consistent in the past 4 years is that these guys can lie, steal and pump the markets longer than you can stay solvent. I also do not see any sign that any relevant majority of Americans are waking up to this shit or could even care less. 90% of Americans are still diddling themselves to Jersey Shore and the soon to be kickoff of football season. In other words, as long as there is bread then there will continue to be circus.
SEPTEMBER 17TH 2011
http://www.entendance.com/forums/viewtopic.php?f=7&t=743&p=19027#p19027
I like the response to the charge that QE2 didn't work. Of course QE worked, FOR THEM! The crack whore needs more crack! If you want to give out more free money, you gotta start by giving it to the top of the food chain. They PROMISE to spread it around.
Of course $1 Trillion could help a lot of people out here, but "easing" really isn't intended to help everyday people now is it? No, the bottom 95% are the rubes who get higher prices, (and all the debt). The elites are the only ones in positions to accumulate wealth faster than the inflation rate.
Fuck 'em all.
The S&P says by donwgrading the US debt : "If you behave badly, then you'll pay the dire consequences."
So, the answer by Bernanke was all but too obvious: "We are listening." Some may say "we are now listening."
The market response the the Blah Blah Jackson hole speech was acurate. There was only one way to go: up, short bets being unwind in a "sell on the news" manner.
So ... what's next. Gold at 3000$, more QE?. I won't be so sure of that...
Odds are not zero for for Gold to retract the same way the market will do, on no "intervention". Bringing silver down as well.
It's that simple.... no QE3 and more value for the USD... less inflation and a contraction that will give the start to a new leg to the economy. People will start to save once more, giving banks a chance. QE3 will only lead to a war... gold at 3000$ or not.
I agree, OB, although I will come across as contrary. A contraction... it sounds so mild. If the Fed were not huffing and puffing with all its might to keep the leaky inflatable raft (pun intended) afloat, it would sink into the shark-infested waters of catastophic deflation. It is not inconceivable to see gold hit 3000, and 30 days later be below 1000, and heading down.
Let's be honest. I'm broke. (I'm also debt-free, which makes being broke not so bad, unlike most out there.) You're broke. What do you really own? A suburban house, A condo? Some pieces of paper that say you own a fraction of a hundredth of a percent in some bankrupt corporate venture? Apple stock? (Apple? Apple is a TOY MANUFACTURER!) A few ounces of gold? Go on, do the math. Your net worth is ZERO, and you're living from hand to mouth, just like everyone else.
Everyone's broke, but we are all involved, (even, no, especially those who are buying gold), in a collective circle jerk of pretending that we're not as broke as hard reality strives to tell us. We're all in denial.
Speak for yourself; I'm quite a long way from being broke.
How about CBs worldwide create money out of nothing and buy up Bonds, Notes, etc. Then they buy Stocks, Obligations, Mortgages and then middle and small sized companies bank debt to help them out of their debt situation. Presto at no cost nearly everybody would be a SLAVE.
After slogging through this jargon-riddled example of pseudo_English newspeak, I admit that my rudimentary reading and comprehension skills were woefully inadequate to the task at hand. So, mine is only an intuitive uderstanding of what the above communique means.
I think Goldman Sachs is admitting that it is fucked, really hornswoggled and "in the barrel", if it is not given a mainline injection of freshly minted Fed fiat-manure with which to continue its own smoke and mirrors show. I THINK Goldman Sachs is suggesting that the continuation of the charade via QE3 must be somehow disguised, but paradoxically, expanded and intensified at the same time, a suitable challenge for Mr. Bernanke.
Somehow, I sense a hidden threat in all of this- perhaps the threat is that inevitable consequenses begi sooner than later if the Fed doesn't act. Perhaps the threat is one of direct-action intervention by Goldman Sachs if they do not get what they want. I can't tell.
By the way, Albert Pike never thought it would end like this. Were he alive to see this, I imagine his Judas-remorse would be quite intense.
It's not "End the Fed" - it's "End Goldman Sachs"
I hope Blankfein is getting some excercise - his perp walk from the front doors of 85 Broad Street to the curb is going to be the hardest 'work' he's ever done.
(well, on pico-second thought, "End them Both" - damn hydra)
Nothing "radical" is going to happen until the S&P breaches the '09 lows. By then, it will be too late because there won't be a market for MBS and other junk. Besides, the FED is not going to take that on its balance sheet without Congressional fiscal guarantees. The only reason it takes GSE paper is because the USG guaranteed its protection. Something like that passing Congress again is highly unlikely. And for all of you who think the FED doesn't care about the debt it holds on its balance sheet then why is it suing BofA?
http://www.washingtonpost.com/wp-dyn/content/article/2010/10/19/AR201010...
The FED is first and foremost a bank. It is going to protect itself from losses.
Some have speculated that the obvious failure of Fed policies to meet its goal in the last 3 years spell demise for Bernanke. I think it’s far more likely that violating the (not so secret anymore) Goldman pact would be the reason.
i suspect that bernanke is momentarily distracted by trying to get obama re-elected
they are trying to figure a way around the congess and time it right so the fleeting sense of euphoria peaks around noevember
the market will stay up as long as the spectre of QE3 looms.
QE3 is kind of like Osama Bin Laden. keep the myth alive and use only when necessary if Obama gets worried about keeping his job.
after all, this is all about jobs. but the only job obama really cares about is his own.
Wrong. QE3 would ensure Obama's defeat, because it would result in higher food and energy costs and it would give his opponent the opportunity to rightfully claim that Obama is bailing out the bankers at the expense of Main Street. The Republicans have already laid the groundwork for making the Fed/QE a campaign issue.
I've seen no sign anywhere that D or R are saying anything of the sort. They are all in on the scam. The people are still blaming those evil A-rabs and speculators for the runup of oil and food. While specs may be to blame for some of it, the VAST majority of the runup in commod prices is due to the FED's actions. There may be 2 or 3 members of CONgress that have mentioned that little tidbit and the Pauls constitute 2 of them. It will be interesting to see who screams if QE3 is started. My bet is that Perry won't say a GD word like he said he would. Either that or he will back pedal and give condescending excuses as to the rationale for it. I mean I work with VERY intelligent people at work and not a single ONE of them has figured out what is causing the price of their food and gas to skyrocket. They are all still blaming OPEC and speculators. I have to explain to them how debasement of our currency via the FED is causing it and then I get the 'look'. You know the one the family gives to crazy Uncle Larry when he starts rambling. Yeah, that look. They just don't get it and neither does America in general. This is why we are fucked.
Hyperinflation to pay off fraud...that's what the call is for.
If any of these happen. Look for the number of hungry to double into the 2.5-3 billion range.
Look for more wars, many more riots, and revolutions.
Monetarism sucks. Doesn't matter what kind.
Class Warfare has been going on for 40 years. They started killing the women and children in 2008. Now they are calling for outright extermination of anything that moves.
Too bad the dems, the repubs, and the tea party are fucktard clueless on how to stop this. They only know monetarism. Or anti-american ideology.
If NerObama would give them cover to do this, he can kiss his presidency goodbye, opening up a window for a tried and true fascist to come in like Rick Perry. (how such a dumbass could get votes is beyond me, but I thought too highly of my fellow American's intellect in 2000 with Bush...no way could anyone vote for such a dumbass..and they did....TWICE.......now I know the repubs will vote for ANY dumbass that spews some lies to them, and are too stupid to notice fascism if they walked in with a swastika tattoo on their forehead)
Must impeach Obama before this shitshow begins. Then......
Glass-Steagall
Fascist? The man loves illegal aliens. Not sure how he could be considered a fascist since he won't even protect his own people from invaders but whatever. He is a silver tongued, mediocre intelligent RINO. Nothing more, nothing less. Just like GW was. Obama has turned out to be more fascist than Bush and Perry combined imo. Obama and crew hate white people. I have seen no signs that Bush or Perry hated any one racial group over another or hung out with known racist radicals unlike the Obamas. Michelle is rumored to be a radical racist behind the scenes who hates white people and from what I've seen of her, I tend to believe it.
I stopped midway: asset roll-over, with the guidance proposed of short for long, makes sense in securing the American people's assets; conversely, it is plain obvious QE as a funding instrument of the funding scale is not only completed but in need to be put to work: long-term @ QE1, mid-term @ QE2 and the classy act of short term (Mr. Bernanke sports a tux on this occasion) QE3 with interest-rates held until 2013 beg operationalisation of funds through an investment plan that we might have a word on but intend to get paid to say it.
So, thanks GS.
President Obama is going to need a scapegoat when he throws his Wall Street fiends under the bus in his 2012 reelection campaign.
My money's on Goldman Sachs.
If it gets that far, that would be fun to watch. Although I wouldn't vote for him no matter what he says or does.
Calling Dr. Ron Paul!!!! Calling Dr. Ron Paul for surgery!!!!!
Buffon Bernanke & Goofy Geithner need their asses removed from guvmunt service. And their mouths are infected from kissing bankers asses.
Hooray! The Fed buys ALL assets of EVERY type, stock market, Treasury market, Corporate bonds market, commodities market all go up to infinity!
We're saved!
DavidC
Here's an extreme option for the Fed to get the economy rolling at no cost. Buy Yen. Buy Yuan (Renminbi). Buy all up and coming BRIC currencies. Buy trillions. These currencies are going to go up in value so the Fed will gain from appreciation and the dollar will gain backing. The dollar will be driven down rapidly and the U.S. will experience inflation as well as asset appreciation. Our balance of trade will improve. Everyone will be happy.
This might work. But, they would still need to figure out how to let Goldman front run them in the market without it being entirely obvious to the man on the street (as for the MSM, that's a given).
The idea that the Fed can magically fix the economy by releasing liquidity is just plain wrong. As Greenspan has remarked: the Fed cannot print purchasing power. During the 70's the Fed released huge amounts of liquidity which caused major inflation but which didn't help the economy one whit.
But although the Fed cannot create wealth, it can certainly redistribute it. Especially to companies that are "in the know", like Goldman.
As long as they hold that growth is coming they are doomed.... Growth with resources hitting the wall is simply not sustainable, it's only a matter of time until that day arrives... It is a new world, they know it but cant handle it, yet. They will reposition shortly, have you?
This must be related to the release of strategic protroleum reserves. HOW? No idea. I'm working on that.
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