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Goldman Sachs: "QE3 Is Now Our Base Case"

Tyler Durden's picture




 

While there is speculation whether today's historic announcement by the Fed in which it dated the beginning of the end of ZIRP, and in reality just the beginning of the beginning, is some form of shadow QE3, what is certain is that there is no Large Scale Asset Purchasing component to it yet. As such while the market immediately discounted the impact of 2 years of duration risk elimination (roughly 70 ES point equivalent), this has now been priced in, and the market must now look to mechanisms by which the it will have to absorb ~ $2.0 trillion in debt issuance over the next year without Fed help (and to those sticking to some modified version of MMT, keep in mind there is only $1.6 trillion in excess reserves so even a full recycling thereof would be insufficient to match demand of funds). Enter Goldman Sachs which puts the argument to bed: "We now see a greater-than-even chance that the FOMC will resume quantitative easing later this year or in early 2012." Why? Because what was lost in the noise today is that the US economy is contracting and the unemployment rate is rising: i.e., we are reentering a recession. And what the Fed did today is absolutely powerless to change this even from the Fed's point of view. Quote Hatzius: "This would probably mean more QE if their forecast converged to our own modal view of a flat-to-higher unemployment rate through the end of 2012, let alone our downside risk case of a renewed recession." But what about the historic dissent? Ah, therein lies the rub: "We view Chairman Bernanke's willingness to live with the dissents as a strong signal that he and the rest of the Fed leadership view the need for renewed easing as more important than the institutional norm of consensus decisionmaking." So there you go. The market will wake up tomorrow with a hangover, and say the one word it always does: "More." Absent that, the slide will, as predicted, resume, and it is none other than Goldman Sachs who has once again, just like back in 2010, set the strawman up for the Fed doing simply more of the same which does nothing to actually fix the economy, but bring us all closer to that epic meltdown discussed by Andy Lees earlier, and by Zero Hedge over the past two and a half years.

From Jan Hatzius: QE3 Now Our Base Case

Summary

We now see a greater-than-even chance that the FOMC will resume quantitative easing later this year or in early 2012. We have changed our call because today's statement suggests that the committee's reaction function to incoming economic news is more dovish than we had previously thought. Although Fed officials still expect a gradual decline in the unemployment rate, they made a conditional commitment to keep the funds rate unchanged "at least through mid-2013" and implied that they would employ additional policy tools in case their economic forecast deteriorated further. This would probably mean more QE if their forecast converged to our own modal view of a flat-to-higher unemployment rate through the end of 2012, let alone our downside risk case of a renewed recession.

Full note:

It's official: the federal funds rate is highly likely to stay at its current near-0% level until 2013 (or later). Although this has been our forecast all along, today's FOMC statement was nevertheless more dovish than we had anticipated in two respects:

1. The policy commitment to keep the funds rate at "…exceptionally low levels…at least through mid-2013" was more aggressive than we had anticipated. Some commentators today expressed disappointment that this is still a conditional commitment, i.e., Fed officials kept an "out" if growth is much stronger and/or inflation much higher than expected. But that was not a surprise. The surprise was the fact that there is a date at all (for the first time ever in the history of Fed communications) and even more so the fact that the date is almost two years in the future.

2. The easing bias in the last paragraph of the statement was more explicit than we had anticipated: "The Committee discussed the range of policy tools available to promote a stronger economic recovery in a context of price stability. It will continue to assess the economic outlook in light of incoming information and is prepared to employ these tools as appropriate." The phrasing somewhat echoed the promise in the September 2010 statement "…to provide additional accommodation if needed…", which sealed the deal for QE2. In our view, the committee's explicit easing bias suggests that the threshold for additional easing in terms of downward revisions to the committee's forecast is relatively low.

The implication is that the committee would probably ease policy further if its economic forecast converged to our own, more downbeat view. While the committee still expects a gradual decline in the unemployment rate, our own modal forecast is a flat-to-higher rate through the end of 2012. In addition, we see a recession risk of about one in three, and if there was indeed a recession the committee would of course ease further.

If there is additional easing, it would likely take the form of QE. After all, "these tools" mentioned in the statement presumably need to be more powerful--or at least not much less powerful--than the action taken today in order to avoid a sense of anti-climax. This means that they are unlikely to consist of small incremental steps such as a commitment to keep the balance sheet large, a gradual shift of the securities portfolio into longer maturities, or a cut in the interest rate on excess reserves from 25 basis points (bp) to zero. This leaves the stronger options, which include QE as well as even more aggressive forms of easing such as rate caps (a form of QE in which the Fed promises to buy as many securities as needed to hit a longer-term yield target), a price level or nominal GDP target, or interventions in non-government securities markets (for which funding from Congress would be needed). Of these, "conventional" QE is very likely the option with the lowest hurdle, and the first one to be deployed.

Although QE3 is now our base case, it is not a certainty. We see three main ways in which our revised call could turn out to be incorrect. First, of course, the economy may turn out to be stronger than our forecast. In this case, Fed officials would not need to revise down their forecast, and would probably not ease further.

Second, inflation might pose a higher hurdle to additional easing than we have allowed. There are only tentative signs of deceleration in core inflation, and inflation expectations show few signs of breaking lower despite the recent weakness in the economic data and risk asset prices. This is a risk to our view, although the stickiness of inflation expectations might already reflect an assumption by the market that the Fed will ease, in which case inflation expectations would fall sharply if the Fed failed to deliver.

Third, the anti-Fed backlash late last year might argue against further QE. That is possible, but the problem might be reduced via a slight tweak in the policy's design. That is, Fed officials might choose to specify the policy not as a large-and-scary upfront number but a smaller monthly flow of purchases. Although the substantive differences are small--e.g. a $600bn purchase over eight months is basically the same as a $75bn-per-month purchase that is expected to last eight months--the cosmetics of the flow approach might be more appealing. Moreover, it would also be more flexible because the committee would revisit the program from meeting to meeting.

While these points could pose problems for our call, we disagree strongly with one argument against further QE that we heard frequently today--namely that the three dissents from Presidents Fisher, Kocherlakota, and Plosser indicate "the end of the line" for further Fed easing and difficulty for the chairman to get his way. On the contrary, we view Chairman Bernanke's willingness to live with the dissents as a strong signal that he and the rest of the Fed leadership view the need for renewed easing as more important than the institutional norm of consensus decisionmaking. There is no question that Bernanke will always have enough votes, and we fully expect him to use these votes to provide further support to the economy if he views it as necessary.

 

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Wed, 08/10/2011 - 01:53 | 1545284 Snidley Whipsnae
Snidley Whipsnae's picture

"We view Chairman Bernanke's willingness to live with the dissents as a strong signal that he and the rest of the Fed leadership view the need for renewed easing as more important than the institutional norm of consensus decisionmaking."

Translation: The hard-headed azzhat won't listen to anyone.

Wed, 08/10/2011 - 03:52 | 1545389 Bob Paulson
Bob Paulson's picture

...other than the World Bank and the Bank of International Settlements.

Wed, 08/10/2011 - 05:25 | 1545428 spiral_eyes
spiral_eyes's picture

Benocide is letting the banksters pillage us like disaffected youths in London.

But here's 10 reasons to be optimistic:

http://azizonomics.com/2011/08/09/10-reasons-for-optimism/ 

Wed, 08/10/2011 - 08:04 | 1545620 Manthong
Manthong's picture

"inflation expectations show few signs of breaking lower"

The money line.

Add ZIRP and what do you get? 

Wed, 08/10/2011 - 01:54 | 1545285 Spitzer
Spitzer's picture

Canadian futures are way ahead... Mining stocks getting a bid ?

Wed, 08/10/2011 - 02:05 | 1545287 Michael
Michael's picture

I told you months ago, there Is going to be fucking QE3 100% guaranteed! What the fuck is it about what I just said don't people get? Am I not speaking fucking English?

Just give it a few more weeks to kick in.

There will be no more "job"(what kind of jobs?) creation in the United States.

I made sure of it! I gave you NAFTA, CAFTA, and GATT. What is it about this don't you understand?

This statement could be said by Bill Clinton and other US Presidents strait to your face, and they would laugh at you while saying it.

It's like a Tacoma Narrows Bridge moment.

Tacoma Narrows Bridge Collapse "Gallopin' Gertie"

http://www.youtube.com/watch?v=j-zczJXSxnw

I may have been wrong in my optimistic prediction of Black Monday October 10th, 2011, this up coming Columbus day, as the day of total worldwide collapse resembling something like this;

Rollover-1981- Depiction of Global Worldwide Economic Collapse in 2011 

http://www.youtube.com/watch?v=WI8dfFN7H1w

Wed, 08/10/2011 - 03:56 | 1545390 BigDuke6
BigDuke6's picture

Hey , why doesn't my laptop allow me to junk self righteous bullshitters who state the fracking obvious and expect us to all to bow down to the legend.... mickeal.

Wed, 08/10/2011 - 04:53 | 1545419 NuYawkFrankie
NuYawkFrankie's picture

Spot on with youre nafta comments Big Guy.

Hey - it seems to me that a that The Squid's sphincter could do with some Quantitative Easing... please form an orderly line.

Wed, 08/10/2011 - 08:10 | 1545635 optimator
optimator's picture

But we gotta finish QE 2 first.  Bankster Bonus at stake.

Wed, 08/10/2011 - 02:01 | 1545288 TruthInSunshine
TruthInSunshine's picture

Have LSAP consist of paying off the underwater component of peoples' mortgage debt (no, I'm actually not really endorsing this, and would never, but it's for context - read further) with a 75% markdown, to paid to the note holder (who will be forced to take the haircut if they've accessed the Fed's discount window in the past or have received funds through TARP or TALF in the past)...

...and tell Goldman that financial institutions and commercial banks won't be eligible to participate in LSAP, and let's read Jan Hatzius's and Goldman's (and JP Morgan's) take on that.

Bitchez.

Wed, 08/10/2011 - 02:02 | 1545290 Eireann go Brach
Eireann go Brach's picture

What is occuring in London is coming to the states very soon, we are only one or two random incidents away from inciting a rage that exists in this country and right now is simmering just below boiling point with a burning rage against bankers and the system itself! That fucking useless Kenyan in the White House is a disgrace and quite frankly his spewing rhetoric is dividing the classes before the eyes of the country and the fucking monkey does not see or get it! Hope and change, there is no hope and let me tell you change is coming soon on the streets.

Wed, 08/10/2011 - 02:07 | 1545297 infiniti
infiniti's picture

"What is occuring in London is coming to the states very soon"

No. It is not. We are not as urbanized, and our access to illicit drugs remains solid. Not to mention that unemployment benefits and food stamps continue to be issued without restraint.

Why riot?

Wed, 08/10/2011 - 02:11 | 1545303 chump666
chump666's picture

as far as riots, doesn't take much to set them off. The UK is a mess, I am thinking France and Germany next

Wed, 08/10/2011 - 02:24 | 1545318 Spitzer
Spitzer's picture

I heard that Philidalphia already has a small rioting problem. I am Canadian and i heard about it.  are you guys awake ?

Wed, 08/10/2011 - 02:37 | 1545337 gwar5
gwar5's picture

Yes, Philly.  Also, flash riotous mobs in Wisconsin, Chicago, couple of other places. None have gone full monty yet like the LA riots, though. Skirmishes.

Had an racial mob incident in Charlotte, NC at the bus depot during July 4th, now moving the depot away from city center before next years Dem convention comes to town.

Heavy racial components to them all. Surprised London has racial component, black guy killed by cops in shootout was black, set it off. Grapes of wrath cometh.

Wed, 08/10/2011 - 04:06 | 1545395 BigDuke6
BigDuke6's picture

'Surprised London has racial component...'

Dude , i'm coming to live with you on that farm - you've won me over.

the UK socialist government of 1997 to 2009 imported 2.8 million mainly uneducated africans, black and arab, while turning a blind eye to another 1/2 million illegals.  they all hate the place and want it to burn.  over 1 in 4 babies in the uk is born to an immigrant - its gone....

 

these are race riots and its hardly started - for the first time in reading ZH for almost 2 years i'm beginning to pay attention to what the guns n ammo boys have been going on about.  even my wife is finally weakening on me getting a firearms license..

Wed, 08/10/2011 - 09:23 | 1545843 Are you kidding
Are you kidding's picture

We CAN'T all live happily together...we're just too different.

Wed, 08/10/2011 - 04:24 | 1545408 mrwhoohoo
mrwhoohoo's picture

Get with the facts: it was not a shootout. The bullet lodged in the cops radio was police issue jacketed round; the 'gun found at the scene' had not been fired. You can look for a racial component - the cops are just letting the dozy white folks think they're gonna be alright while they sharpen their techniques on the black population. But when the shit hits the fan, those same police bullets are gonna be turned on you. You don't really think it's going to be business as usual in whitey land do you? Keep drinking the Kool Aid, bud, I'll be using you as body armour. Thank God there's people like you around - it'll make the survival of the fittest easier.

Wed, 08/10/2011 - 05:44 | 1545440 slaughterer
slaughterer's picture

The local disenfranchised in Florida are holding up banks and stealing cars at an alarming rate. 

Wed, 08/10/2011 - 02:13 | 1545305 Eireann go Brach
Eireann go Brach's picture

Why riot? seriously...when you have rampant unemployment which is at 30% to 40% amongst the ethnics under the age of 25, plenty of time on their hands, zero chance of getting a job, no money in their pockets, fuck all else to do but listen to the growing anger that is starting to penetrate all facets of society now that the sheep are taking notice, my friend there you have plenty of reasons to pillage and loot! it will take one or two incidents to initiate the riots, but it is coming. Now go back to bed and read your people magazine and feed your fat wife a ham and twinky sandwich!

Wed, 08/10/2011 - 02:23 | 1545317 topcallingtroll
topcallingtroll's picture

Uuhhh...I work with those types.

They dont want a job.

They just want the govt. checks to continue.

Can u believe they call it "getting a raise" when they get a COLA increase? As if there is somehow moral equivalency with working for a paycheck.

Cut them off now! We are going to have riots anyway, those entitled assholes thinks the taxpayer owes them a living. Cut them off now. Get the riots over with. Kill a whole bunch of them, and make sure they never fucking feel entitled to free checks again. Going hungry cuz they are too good for the job available and refuse it is a good lesson.

Wed, 08/10/2011 - 04:22 | 1545406 BigDuke6
BigDuke6's picture

You work with those types?.... you poor sod and you are entitled to judge more than others who have never met one and think its not their fault cos they are disadvantaged or some other bullshit.

i used to help them breed... less so now.

they riot because its fun for them to destroy, they can steal things and the main one is they know they will get away with it.

uk prisons are like holiday camps and the judiciary limp wristed, hand wringing liberals who take a lot of the responsibility of the uk going from a great country to a total shithole within 20 years - that takes a concerted effort.... like the usa now i guess...

 

Wed, 08/10/2011 - 04:36 | 1545416 mrwhoohoo
mrwhoohoo's picture

Haha more recycled elitist BS. You really think you're going to escape what's coming because you've got white skin? Sorry for you dude, but I'm glad there's a bunch of dupes like you out there. We're going to be using you as smiling willing human shields when they come for the rest of us. Why do you think we're stocking up on hardware? The white-black thing worked as long as there were enough crumbs to sprinkle in front of white zombies. When it comes to their bonuses vs your life do you really think they're gonna give a shit that you're wearing that white sheet? You're just another expendable mouth to feed. Smoke on dude ... smoke on ...

Wed, 08/10/2011 - 06:05 | 1545452 BigDuke6
BigDuke6's picture

You are rambling like a moron... whats your point?

that guy that got shot - fuck him - he was a piece of shit - he's dead - goooood.

you think cops are the enemy? - fuck you - when your rioting buddies come into your house at night, who you gonna run to .

i'm not a fan of cops - i get busted too but the cops are everyones daddy when the scum come for your gold.

you're the kool-aid boy... probably some college kid who's chocking the chicken over the lap top as we speak - i've earned my cone punk... so i will smoke on.

you can shut the fuck up.

http://www.telegraph.co.uk/news/uknews/law-and-order/6440594/Jack-Straw-...

 

Wed, 08/10/2011 - 05:38 | 1545436 LikeClockwork
LikeClockwork's picture

Well said.

Wed, 08/10/2011 - 05:43 | 1545439 Die Weiße Rose
Die Weiße Rose's picture

what,still no live feed from those Riots in London ,Manchester,Birmingham ???

Zero hedge is pretenting this is Not happening.

If it was Greece or Italy or Germany or France the World would End,

but since it is Mother England and part of the Anglophile Empire,

and not really Europe according to some...

we just will never even mention those Riots in England and maybe it all just goes quietly away

while we hope the Euro-Zone will blow up....except England of course...

hello ZH London is burning !

Wed, 08/10/2011 - 05:14 | 1545425 CosmicBuddha
CosmicBuddha's picture

"No. It is not. We are not as urbanized, and our access to illicit drugs remains solid. Not to mention that unemployment benefits and food stamps continue to be issued without restraint."

 

I live in the suburbs of London. You may not be as urbanized as us, but I believe our access to illicit drugs at least equals your own, and our benefits culture makes yours pale into insignificance. There are millions of people who just do not work for their entire lives and are supported by the state. I think the main difference between our countries is that our government has embarked on an austerity program focused mainly on cutting the dependency culture, whilst your government, being left leaning, has not. If and when your government starts making meaningful cuts, then you will have riots. Look at Greece.

Wed, 08/10/2011 - 02:19 | 1545312 mfoste1
mfoste1's picture

lol no its not.....only because americans are so fucking stupid and lazy

Wed, 08/10/2011 - 06:37 | 1545472 moregoldplease
moregoldplease's picture

I hope not but think you are correct.  Stay armed and out of areas where you might have to shoot.

Wed, 08/10/2011 - 06:37 | 1545473 Alpha Monkey
Alpha Monkey's picture

That fucking useless Kenyan in the White House is a disgrace and quite frankly his spewing rhetoric is dividing the classes before the eyes of the country and the fucking monkey does not see or get it!

I wish I knew how to properly convey how ironic this is.  I just want you to know I'm laughing at you. :D

Wed, 08/10/2011 - 08:12 | 1545584 YHC-FTSE
YHC-FTSE's picture

Here's a touch of surreal pairing. Looking through the listings for the "Rise of the Planet of the Apes" preview in London shows that the only places showing the film are the Peckham Multiplex and Cineworld Enfield tonight. Monkeys in the audience and on the screen - at least they'll be off the streets. You can't make this shit up. 

 

Edit: Just realized how the above might be interpreted. When I write "monkeys in the audience", I mean feral kids of all colours who have been rampaging around London the last few days, not just black folks. OK? 

Wed, 08/10/2011 - 02:02 | 1545291 barliman
barliman's picture

 

The FOMC shat out a stink bomb of both policy and wording today. This suggests to me that the official vote may have been 7-3 but it started out as 3-7 against Mr. Bernake and it took giving up on QE3 action at this time and drafting a consensus agreement to get to a more face saving 7-3 vote. Any thoughts on this topic?

 

barliman

Wed, 08/10/2011 - 05:42 | 1545438 oogs66
oogs66's picture

Thats an interesting take on it. Makes sense

Wed, 08/10/2011 - 05:54 | 1545445 slaughterer
slaughterer's picture

The Fed initiated one of the three policy tools BB discussed in his last presser: 1.) the change in language about ZIRP.  They most certainly discussed 2.) inflation targets, and 3) OT2 and QE3.  The resistance was probably strong against telegraphing 2.) or 3.) in this statement.  Give it time, 2.) and 3.) will come as the unemployment and deflation numbers get worse.  The FOMC Borg is basically run by BB and Dudley (the GS mole)--hawkish dissent has little importance.  The time-line for QE3 late 2011/early 2012 corresponds perfectly to a simulated recovery and "wealth effect" right during the run-up to the 2012 elections.   It is pretty clear that the Fed is supporting a re-election of O, despite its alleged political neutrality.  If anyone thinks the Fed/Wall St. wants the radical fiscal policies that showed up in the debt ceiling debate, you are sorely mistaken. 

 

Wed, 08/10/2011 - 02:03 | 1545292 Snidley Whipsnae
Snidley Whipsnae's picture

"I may have been wrong in my optimistic prediction of Black Monday October 10th, 2011, this up coming Columbus day, as the day of total worldwide collapse resembling something like this"

Wrong? Could you have been wrong? You could attribute the bad call to your crystal ball being on the fritz... or, a bad hair day?

We saw today the ground work for a new pattern. The Fed makes an announcement and immediately GS says the opposite... When Fed spoke equities began a sell off... When GS spoke equities corrected ~400 pts into the close...

I say we see more of this in future...

 

Wed, 08/10/2011 - 02:09 | 1545302 Michael
Michael's picture

Definitely a bad hair day, but I'm sticking by my October 10th call for complete and total worldwide economic collapse.

Wed, 08/10/2011 - 02:26 | 1545322 gwar5
gwar5's picture

What's up with Oct 10th?

Why that date?

Wed, 08/10/2011 - 07:18 | 1545511 snowball777
snowball777's picture

Because Michael is a total Libra:

 

Your element: Air

Your ruling planets: Venus

Symbol: The Scales

Life Pursuit: To be consistent

Vibration: Unsteady

Libran's Secret Desire: To live an easy, uncomplicated life.

Wed, 08/10/2011 - 02:03 | 1545293 infiniti
infiniti's picture

a) There will not be a QE3. The only thing QE programs achieve is higher gas prices, even the retards at the fed realize this (now).

 

b) The fed will never, ever, ever increase the fed funds target. Ever.

 

c) The fed will never, ever, ever reduce the size of their balance sheet. Ever.

 

d) We are not in a recession. We are not going into a recession. We are stuck at 1-3% growth (on average) for many years to come. If anything, growth will stabilize and increase due to the decline in treasury yields and gas prices.

Wed, 08/10/2011 - 02:05 | 1545295 chump666
chump666's picture

Who cares, Bernanke doesn't indicate a QE3 now, so it comes later, by the time he drops QE3...China would have imploded in 2h. When China crashes won't me crap what Bernanke does + the US economy will fall into a major depressive slump.  The wake up call was the last few days of trading = a sh*tstorm is brewing.

Wed, 08/10/2011 - 02:08 | 1545298 TruthInSunshine
TruthInSunshine's picture

"Although the substantive differences are small--e.g. a $600bn purchase over eight months is basically the same as a $75bn-per-month purchase that is expected to last eight months--the cosmetics of the flow approach might be more appealing."

 

The excerpt above is where one gets a flavor, or a mere taste, of all that is Goldman Sachs' status as a coked out whore, addicted to taxpayer extracted, Bernanke distributed, largesse.

Goldman Sachs is jonesing for a fix so badly, there is no level they wouldn't stoop to. It's pathetic.

Wed, 08/10/2011 - 02:09 | 1545300 juwes
juwes's picture

brother of murdered father of 2 in England:  http://www.youtube.com/watch?v=ZjrLBwgiZvc

eye witness to beat down of 16 year old girl by gaggle of police (seems to have set things off):  http://www.youtube.com/watch?feature=player_embedded&v=hcwUyZ68C0k

so far only video of that beat down, but seems to confirm above guy's story:  http://www.youtube.com/watch?feature=player_embedded&v=kXVfdsHmp-g

 

News and movements travel fast.  Organize now before the chaos, once it starts, it will be dark and... chaotic.

Wed, 08/10/2011 - 02:15 | 1545307 chump666
chump666's picture

slight pressure on crosses, Euro stocks on open will suck, some USD bids.

Wed, 08/10/2011 - 02:27 | 1545323 Spirit Of Truth
Spirit Of Truth's picture

And what makes you think telling the truth will make a difference?

Wed, 08/10/2011 - 03:01 | 1545326 tahoebumsmith
tahoebumsmith's picture

Nothing but a bunch of junkies waiting for their next fix. They are all gathered around licking the mirror and bitch slapping their hooker named Starfire waiting for their dealer Benzene to bring on more.  At one time Starfire actually looked hot, now she is just the washed up slut she always was. Reality bitchezzzz... Time to look in the mirror, you are nothing more then a compulsive gambler with a substance problem. Stop taking down the rest of America with your addiction. At this point we are all just DREAMERS hoping for a brighter future, stop thinking about yourselves for just a minute. Unfortunately we have put another 2.5 trillion nails in our coffin to secure our demise...Party on fucktards because your days are numbered. Instead of doing your little 8 ball might just as well make it an ounce. Tick.tock.tick,tock, just remember the harder you DREAM and game the system, the less chance your children and grandchildren have to enjoy the America we all once took for granted...nothing more then a bunch of slutbags in my opinion...see you in the Hamptons someday soon beatches....

http://www.youtube.com/watch?v=YbJqswLi3uE

Wed, 08/10/2011 - 02:29 | 1545327 Taku
Taku's picture

How dare any of you call "QE3", QE3!!!

SHHH!

Use another damn acronym or phrase something totally ambiguous, preferably circular in notion.

Wed, 08/10/2011 - 04:15 | 1545401 BorisTheBlade
BorisTheBlade's picture

Recursive Monetary Mayhem, you don't even need to attach numbers to it.

Wed, 08/10/2011 - 07:04 | 1545495 spankfish
spankfish's picture

How about QE3 the new government Date Rape Drug of Choice?

Wed, 08/10/2011 - 02:29 | 1545328 SeverinSlade
SeverinSlade's picture

That was the irony of the frantic rally.  The Fed basically confirmed that the shit is about to get ugly and that it, as of right now, has zero plans to do anything about it.  We've known for a while that interest rates will remain near zero. 

The morons on CNBS all day were talking about how stocks are undervalued and that high dividend stocks trump the low yield of treasuries.  I have a simple question for the CNBS idiots.  How helpful is some puny dividend when your primary investment drops 20+ percent?

Europe will continue to fall apart.  The US will continue to spend money and wage war.  QE3 will likely come at Jackson Hole just like Bill Gross and ZH originally predicted.

Wed, 08/10/2011 - 02:58 | 1545355 darkstar7646
darkstar7646's picture

The rally was the government trying to save failing businesses across the Dow 30.

We were due for another 700 or so down to get the Dow near where the losses in the rest of the world have been for the last 3-4 sessions.

You know what happened next.

Wed, 08/10/2011 - 02:43 | 1545342 myne
myne's picture

Bernanke would be the most hilarious 4x4 driver ever.

We're bogged!

MORE POWER!

*Giant rooster tails*

We're bogged more!

Not enough power!

*buries own 4x4 in mud*

Shit, we still dont have enough power. Hit the NOS!

Wed, 08/10/2011 - 07:20 | 1545519 snowball777
snowball777's picture

* Exits through sun-roof *

* Enters new 4x4 *

MORE POWER!

*Giant rooster tails*

We're bogged more!

Not enough power!

Wed, 08/10/2011 - 02:46 | 1545345 Zer0henge
Zer0henge's picture

Bitchez?

Wed, 08/10/2011 - 02:48 | 1545346 gwar5
gwar5's picture

Looks like the QE3 helicopter is warming up.

Wed, 08/10/2011 - 02:57 | 1545354 darkstar7646
darkstar7646's picture

It took off about 2 PM Eastern yesterday (Tuesday) afternoon.

That was one of the most blatant PPT rig jobs I've seen ever.

The market was crapping all over the Fed's announcement, and was probably going to shed another 700 or so until the PPT stepped in and literally bought everything.

Wed, 08/10/2011 - 03:05 | 1545360 tahoebumsmith
tahoebumsmith's picture

ponzi protection team...that's right, however it's different when your very own government is about to be called on the rug....

Wed, 08/10/2011 - 03:06 | 1545363 Religion Explained
Religion Explained's picture

The forces that want to take down the world economy are close to getting their wish. One way or another, this sucker is coming down. If it takes a war to bring it all down, then we'll have war.

Forces trying to prevent collapse (The Bernank and his status quo mafia) are going to lose and then those for freedom and local government (you and me) will have to fight those for the NWO and centralized government Malthusians (many mega wealthy and all progressive thug parasites) almost a la empire vs. rebels star wars.

War is coming ... maybe as soon as this Fall. You want to hide? How does Antarctica sound? Because there will be no spot on Earth unaffected by what's coming.

And if I was a religious person, all the worldwide disasters from Fukushima to famine to crop failures combined with the coming shortages and impending economic collapse, would get me giddy with anticipation.

Ha, ha, just kidding, everything is fine, BTFD tomorrow, again.

 

Wed, 08/10/2011 - 04:05 | 1545396 RmcAZ
RmcAZ's picture

http://english.peopledaily.com.cn/90778/7565153.html

Yuan rises to 6.41 per dollar as China pushes back inflows -- "Analysts say that Beijing would allow the yuan to rise more rapidly against the greenback in the coming weeks, as the U.S. Federal Reserve has declared it would keep on its extraordinary loose monetary policy – possibly by launching QE3 to buy more U.S. government bonds – in its desperate action to flood American bank system with credit and prevent America from a double-dip recession."

As long as the Yuan keeps (slowly) appreciating, it will mean an increasingly worse standard of living for Americans... there is nothing the Fed or Gov't can do to stop it.

Wed, 08/10/2011 - 04:28 | 1545409 caerus
caerus's picture

yeah but what about "super congress"

Wed, 08/10/2011 - 05:28 | 1545431 YuShun
YuShun's picture

As the yuan appreciates, almost everything at Walmart will become more expensive, and petroleum will become less expensive for China's rapidly growing number of auto owners, but the US government does not want to stop the appreciation of the yuan.  For years the USG has been urging the Chinese government to speed up the rise in the value of the yuan relative to the dollar, saying that America will import less and export more.  What the government could do to improve the economic outlook for the American middle class would be to cut military spending by a few hundred billion dollars per year.  Ron Paul and Barney Frank agree on this.         

Wed, 08/10/2011 - 04:35 | 1545414 chump666
chump666's picture

there goes the futures. iea wake up call.  china baby

Wed, 08/10/2011 - 05:51 | 1545443 LikeClockwork
LikeClockwork's picture

+1 Eireann

 

Can't stomach the elitist ivory-tower doucherati, on the box, questioning the catalyst for the riots. Oh, it's not political a la Greece, Syria etc it's just opportunism (bullshit). The flatscreen thieving revolution - Sherlock they be hocking these for cash and if their smart they'll buy you know what with it.

You might even say it's Orwellian with the poor, dispossessed proles cordoned off and left to rot while the middle classes are taught to finger-point and inhale the bullshit.

Wed, 08/10/2011 - 05:54 | 1545444 Sp00ky
Sp00ky's picture

And, as we all bow down to GS, especially on ZH, and also especially since Congress is gridlocked with their tea parties, no real help can be hoped for.

By the way....wasn't the Tea Party supposed to go in, kick some ass, change things in DC?  How come they didn't start with all the corruption in DC - all the perks and insider trading they get to do, all the perpetual salaries they get to keep, all the senators and congresspeople getting to go into lobbying .

I mean, if you're gonna clean house and kick ass, you gotta start clear out all the clutter and incumbrances first, right?  Instead of going to your neighbor's house and telling him what he should do.  

Nope.  They went in and created gridlock, and ain't nothing getting cleaned up or cleaned out.  Oh, they did manage to change one thing - the S&P rating.  Who SAID their main reason for the downgrade was because now there was an element of the US defaulting, not paying their bills.  Way to go, guys!  Do you stiff the people you owe money to at home in your house, too?  

 

We DON'T need QE3.  We DO need another stimulus, and not to the effing bankers, or companies who will sit on it.  Put conditions on the money, or it's paid back with interest.  Unless someone wants to put up the money out of their own pockets to fix the infrastructure of the country - you know - those roads and bridges falling apart, 100+ yr old water mains breaking, electrical grids failing, waterways failing, etc etc.  Or, of course, we could just do it with local and state taxes.  Is that working for ya?

 

 

Wed, 08/10/2011 - 06:46 | 1545484 Greenhead
Greenhead's picture

Wonderful, should we pay for the stimulus with even more debt, higher taxes or just print?  Perhaps what we need is a cleansing and reset.  Would it be difficult, awful and even desperate at times?  Perhaps.

Continuing down the path of more and more spending really isn't going to fix anything.  Postpone for a while, maybe but fix, no.

Wed, 08/10/2011 - 06:18 | 1545460 caerus
caerus's picture

GC doji 8/3, 8/4, 8/5 then 8% increase to high on 8/9...hmmm...if it corrects (when) maybe msm can talk about the silly gold bubble...imho

Wed, 08/10/2011 - 06:28 | 1545464 Everybodys All ...
Everybodys All American's picture

What was announced yesterday was the first half of operation twist. They have basically sold the short end of the curve with the intention to be announced in Jackson Hole or later of buying the long end of the curve.

Wed, 08/10/2011 - 06:32 | 1545467 Die Weiße Rose
Die Weiße Rose's picture

Goldman Sachs and those vultues who looted our investment funds,be warned:

How quickly can the orgy of thieves and plunderers be stopped?

"Hundreds and hundreds of people, we have your image, we have your face, we have your acts of wanton criminality on film. We are coming for you, from today and no matter how long it takes, we will arrest those people responsible,"

http://www.spiegel.de/international/europe/0,1518,779318,00.html

Wed, 08/10/2011 - 07:53 | 1545593 snowball777
snowball777's picture

http://www.youtube.com/watch?v=sxr_QALqhe8

'Cause I'm inclined to stoop down
Hand out some beat-downs
Cold runna train on punk ho's that
Think they run the game
But I learned to burn that bridge and delete
Those who compete at a level that's obsolete
Instead I warm my hands upon the flames of the flag
As I recall our downfall
And the businesses that burned us all
See through the news and the views that twist reality
Enough I call the bluff
Manifest destiny

Landlords and power whores
On my people they took turns
Dispute the suits I ignite
And then watch 'em burn

 

 

Wed, 08/10/2011 - 07:19 | 1545517 johngaltfla
johngaltfla's picture

Interestingly enough, the stock chart for GS does not confirm QE3 and in fact seems to be validating a repeat of the 2008 crash and burn before any action is taken. In fact the entire financial sector is telegraphing a massive contraction which as I have been warning for months now, will begin "officially" in September and will not end until Q2 2012 at the earliest.

The only model the Fed can engage in which will work is the Riksbank rescue and if they try it in 2012, it will be too late and result in a disasterous case of hyperinflation.

Wed, 08/10/2011 - 07:20 | 1545518 johngaltfla
johngaltfla's picture

Interestingly enough, the stock chart for GS does not confirm QE3 and in fact seems to be validating a repeat of the 2008 crash and burn before any action is taken. In fact the entire financial sector is telegraphing a massive contraction which as I have been warning for months now, will begin "officially" in September and will not end until Q2 2012 at the earliest.

The only model the Fed can engage in which will work is the Riksbank rescue and if they try it in 2012, it will be too late and result in a disasterous case of hyperinflation.

Wed, 08/10/2011 - 07:45 | 1545574 Re-Discovery
Re-Discovery's picture

Philadelphia IS a mob.  Horrible city.

Wed, 08/10/2011 - 08:08 | 1545629 YHC-FTSE
YHC-FTSE's picture

Just because everyone here hates the vampire squid, it does not mean this article doesn't contain valuable info. How much and when QE will be sneaked into the markets is pretty much unknowable (Although the Fed's income from payments in its securities holdings should give a clue), but knowing that it is probable, or even likely is valuable to guess the next pump and dump. 

 

After all, haven't we always observed that the Fed, treasury, the administration, and their international bank equivalents are traditionally Goldman Sachs alumni? 

Wed, 08/10/2011 - 08:15 | 1545643 LongSoupLine
LongSoupLine's picture

All these posted comments, and NO ONE has said it yet?...

 

Silver...Bitchez.

Wed, 08/10/2011 - 08:28 | 1545670 Cursive
Cursive's picture

Nothing but GS talking their book. If it where going to happen, GS wouldn't br lobbying so hard in the public. QE3 is not guaranteed.

Wed, 08/10/2011 - 09:44 | 1545954 gigeze787
gigeze787's picture

No QE3 until the Congress passes a credible budget -- at least $4T over ten years.

This market drop is BB telling the Congress:

"I gave you 10 months of QE2 to get your act together and you did not. So, you will suffer as your constituents suffer. I will no longer be an enabler of your debt addiction."

Wed, 08/10/2011 - 10:03 | 1546065 Grand Supercycle
Grand Supercycle's picture

UPDATED S&P500 CHART THAT FORECAST THE CRASH:

http://bit.ly/x618

My long term indicators still warn of USD rally and EURUSD weakness.

Wed, 09/14/2011 - 05:32 | 1667650 chinawholesaler
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