This page has been archived and commenting is disabled.
Guest Post: QE3, What’s Not To Like?
Submitted by Peter Tchir of TF Market Advisors
QE3, what’s not to like?
Even the most die-hard bear or those who simply believe QE2 did more harm than good, have to resign themselves to the fact that this Fed will enact QE3 at its earliest possible convenience. While I remain convinced that some current 5th grader will eventually be awarded a PhD in economics (not from Princeton) for their work on the folly of the QE programs, it is time to prepare for QE3. Those of us who had hoped the dissent from the August FOMC meeting was a sign that the Fed was wavering on its “print and print some more” philosophy, have seen those hopes dashed against the rocks. The doves have come out in full force. The minutes show that some members think we should have already started QE3 and now one of the dissenters has backtracked.
I think that playing this from the perspective of being long stocks is a potential mistake this time around. “Daily Needs” commodities should do well and even the stocks of companies that produce them. PM’s should do well, since whether they will work long term or not, they have rewarded those who have treated them as de facto money for the past couple of years. High Yield bonds had seemed oversold, but that trade already appears to have reversed too far, too quickly as investors have piled back into risky assets.
Will QE3 Support Stocks?
It is virtually impossible to find anyone who doesn’t think QE is bullish for stocks. It is easier to find someone who still believes Obama deserves a Nobel Peace prize than it is to find someone who thinks stocks won’t do well because of QE3. That is scary. Whenever the market becomes universally convinced of something, it gets set up for disappointment. Not the disappointment that QE3 won’t come (it is coming), but that everyone has fully priced it in. It is hard to remember anything from a year ago, but even when QE2 was announced, there was some question of how much good it would do for stocks. There was actual debate. There was the famous Tepper moment on CNBC where he dispelled the debate and stocks started a relentless march higher. Until that point, and even to some extent, after that, investors debated whether or not QE2 was really good for stocks or not. By the end, the only investors who were arguing that QE2 had little impact on stock prices, were the bulls and they were only saying that as a justification why stocks would remain strong after QE2 finished.
What did stocks really do during QE2?
What actually happened to stocks under QE2? It was first hinted at in Jackson Hole in late August with the S&P 500 at 1050. By the time it became official policy on November 3rd, the S&P was already up to nearly 1200. Stocks actually closed the month of November lower than where they were on the day QE2 was made official. From that point, there was a relentless march higher, peaking at 1340 in February. Then market bounced around in a fairly wide trading range. Peaking just north of 1350 a couple of times, but trading back down to 1265 a few times as well. Stocks finished June 30th, the end of QE2 at 1320. Since the end of QE2, it has been as low as 1100, almost back to where stocks were when the whole program was first hinted at. The half life of QE seems to be shorter than that of a teenager’s viral video fame.
So, if nothing else had gone on in the world, and all of the moves in stocks were attributable to QE2, how should it be viewed? It seems as though the bulk of the benefit came prior to its official announcement. Stocks were up 150 points since Jackson Hole. SPX only gained 120 points from then until it concluded on June 30th, and except for a 2 month period where it was a daily grind higher, the market was volatile and had several -5% moves. The hype surrounding the potential for QE3 seems to be greater than the actual performance.
What else happened in that time frame? Well, at the end of August, the EFSF was officially unveiled. It was almost comical in its construction, but the market liked it. The ECB added Irish and Portuguese debt to its bloated balance sheet already loaded down with Greek debt. Ireland received IMF support. We had an election that was viewed positively by the market. Remember all the “hope” surrounding those November mid-term elections? Then Obama allowed the Bush tax cuts to remain in place and added some payroll tax cuts just to keep everyone happy.
So maybe, just possibly, some of those events also played a role in the performance of the stock market?
What is different this time?
So before going “all-in” long based on QE3, it is worth spending some time to figure out what is different this time around.
Now everyone believes QE3 will ensure stocks go up, there was doubt about that in the past.
Stocks jumped 150 points from the first hints in 2010, until it was actually implemented (we are up 125 from the lows already).
Stocks were at 1050, rather than 1225.
The ECB was worried about inflation and was willing to raise rates and not fight the dollar devaluation with their own debasement program. With the slew of weak data coming out of Europe, it might be prudent to assume that they are working on their own devaluation plans – which may not help US stocks. Although the S&P is up almost 13% in the past 12 months, it is only up 1% in Euro terms. Making the assumption that Europe will play nice again is a risky proposition.
Investors, politicians, and maybe even some real people actually believed in the wealth effect. It should be clear now that the wealth effect is enjoyed by a limited number of households. Their purchases can drive the earnings of Tiffany’s and Saks, but the move in stock prices didn’t really help the average family. How dumb does the Fed think the average American is? The Fed and Wall Street say your pathetically small 401k (average of 75k according to Fidelity) is up, so spend, spend, spend! Yes, spend, and please ignore all the talk about taking away those pesky little “entitlements” that you feel entitled to. The wealth effect is too small, especially when everyone realizes pensions and benefits that they had planned on are being stripped away, and that housing isn’t coming back any time soon, and that earning interest on balances is a thing of the past. Their 401k isn’t even “waking up and getting out of bed” money to most of the people advising them to spend. That is bizarre and seems unstable.
Transitory used to be a word that meant something that came and went. It was a temporary thing. Now it only means something that the Fed wants to pretend they aren’t responsible for. The CRB index was 268 last September 1. Today it is 342. Yes, it was above 360 at one point, but that doesn’t meet any normal definition of “transitory”. The Fed has unleashed inflation pressures, and even if we don’t admit it, the rest of the world understands it, and will take policy measures to protect themselves. We do not make policy in a vacuum. Other countries see what we are doing and do react. The reactions may not be instantaneous but they are real and will have long term impacts that are difficult to change. Pretending the pursuit of QE doesn’t cause other nations to take steps, potentially to our detriment, is short sighted and wrong.
Contagion in Europe was whether Ireland and Portugal could be contained. It is now about Italy and Spain and the banks in all countries.
That Europe was in a “liquidity” crisis rather than a “solvency” crisis was believed by many.
The US was AAA at all rating agencies and had not made a fiasco of its debt ceiling and spending.
BAC didn’t “need” money and was trying to increase its dividend when its stock price was $13.50. Now they still don’t “need” the money, but are happy to dilute shares with sweetheart deals at $7.
I can write an entire article about QE and not mention the effect on the treasury market, and not feel like I’m missing the key market impacted by QE.
Entrepreneurs are nervous about the uncertainty. Not the uncertainty the establishment constantly points out about taxes and debt ceilings, but the uncertainty that comes from policy after policy that benefits the incumbents at the expense of those looking to profit from being prepared for times like this.
Maybe all the Fed members can read Winnie the Pooh and the Money Pot prior to the September meeting. It is a simple story of how greed, and gluttony, and doing what feels good now, can have some very negative long term consequences. That story ends well, but maybe the path of printing money won’t. Another round of QE3 may not do much to help the stock market this time since so many of the factors are different, so much has been priced in, and there were many other positives that helped stocks last year that may not reappear.
»
- 15094 reads
- Printer-friendly version
- Send to friend
- advertisements -
Man the fire hoses boys. Like or not, the engine room has started the emergency pumps and the liquidity is coming up fast.
PMs to the moon on QE3... Throw the hose nozzle lever to 'fog' CogD, this is an oil fire in the engine room! Don respirators and wet down fire suits before entering.
As it happens, I've just finished reading Dr Paul Krugman's latest book "Conscience of a Liberal" and I have to say it's a masterpiece. Dr Krugman elegantly and movingly describes the vast rise in wealth disparity over the last 50 years, with an analysis of the underlying economic factors. He makes the very convincing case (with stacks of evidence) that this is primarily due to a lack of fiscal and monetary stimulus. The nobel prize winner is a true inspiration and I would highly recommend this book to any open-minded intellectual or aspiring economic scholar.
Krugman is an idiot... and if you bought Krugman's book, and did not check it our of your local library, what does that make you?
I didn't read the book... Is there an update on the alien invasion?
Krugman may be an extremist, but Adam Posen makes Krugman seem like a QE wimp.
http://azizonomics.com/2011/09/01/adam-posen-calls-for-printing-money-2/
An Alien Invasion is happening right before our eyes. I have proof! Tell my this is not a surgically altered Alien.
He's not the only one!
Please point out a part of the stack of evidence regarding the lack of fiscal and monetary stimulus by government. Please keep in mind the secret $16 TRILLION in monetary stimulus the Fed threw out there on top of the Bush and Obama stimulus, extended unemeployment benefits, etc.
The reason we are having this recession is specifically because of all of the excess monetary and fiscal stimulus. Taking borrowed tax payers funds and tossing it towards unproductive economic acitivities is what crowds out good investments for guaranteed losers, i.e. you and Krugman.
We have had 40 years of deficit financing in order to acconomodate 40 years of fiscal and monetary stimulus and the false prosperity is making itself know. I sure hope the Federal government is paying you well for your unfounded horseshit.
The last 50 years have been dominated by monetary hawks and fiscal cowards. Dr Krugman has been screaming from the roof tops for the last two years that we need at least another 2 trillion is fiscal stimulus, but his calls have largely fallen on deaf ears. I'm sad to say that even Dr Bernanke, for whom I have great respect, has been a major barrier to fiscal stimulus by refusing to make any concrete policy decisions regarding further monetary easing. These dovish economists and federal reserve officials are modern-day founding fathers, and will be regarded as heroes by generations to come when they are finally understood.
MillionDollarBonus,
HammyWanger/HarryWanger is that you?
.
I bet it´s TD playing agent provocateur.
Fuck off Krugman. And stop referring to yourself as "Dr." Neither you or the Bernank are worthy of that title.
Are you just visiting this planet? Are you part of Krugman's Alien Invasion?
...or, just another troll sent by the gov?
Krugman will be forgotten by history, Bernanke, Greenspan, the bankers on Wall St, Geitner, and their ilk, will be villified by history.
unless theyre the ones who write it
Unfortunately for Krugman, his models remained detached from reality. In the real world, commodities and energy in particular are all that matters. No energy, no work can be done. No work, no economy. Krugman constantly ignores the real cost of capital creation and the mis-allocation of capital that occurs when you institute QE without any oversight or accountability (which is what we have had for some time now).
The bottom line is that while many agree that more captial creation is needed, in this current regulatory environment that is simply fraudulent, all we will get is more capital mis-allocation and wealth destruction.
Fine with me, I hold gold and a basket of commodity stocks. Bring it Krugman you bitch. Let's see, what happened to commodities and metals last time? Yeah, bring it indeed.
LoP, I'm surprised at your comment. You've been here long enough, and I've enjoyed reading many of your posts, to know better than to elicit this kind of response.
Even though Hamy's alter ego exaggerates many aspects of MMT, the bottom line is that, absent any countervailing restrictions, there really aren't any limits on debt/currency issuance.
I keep raising these same points, seemingly to no avail, but here they are again: what prevented Nazi Germany/Imperial Japan from paying any price they so chose, in any form they wanted, paper or otherwise, once they militarily controlled critical resources?
Until some power rises to challenge the US, we can issue as much paper we want to purchase oil, pay interest, supply food & hire as many millions of people necessary to dig/fill holes, all the while suffering no adverse inflationary effects.
Everyone keeps looking around wondering when the other shoe is going to drop, marveling at how TPTB seem to keep everything elevated. Since ZH is the leading edge of contemporary thought, this should be of some interest to many readers.
I suggest if one looks a little deeper, there is a very simple, rational explanation of what is occurring.
As long as the debt can be serviced. The debt is going up...but real wages to pay the debt servicing are not. That's why the Ponzi collapses...you run out of enough money coming in to pay the top.
yup, because there is never a good time to pull back...that is the problem with krugman and them, there is never a good time to pull back
.gov does not control resources, corporations do. The us military enforces property rights for these corporations thru tax payer funding. The amount charged by who ever controls resources is commonly referred to as profit. Using a military to take resources still incurs costs that need (and will) be subtracted from revenue.
if money can be printed and resources are free (if you just murder people), then why the fuck do I pay taxes and for gas.
"we can issue as much paper we want to purchase oil, pay interest, supply food & hire as many millions of people necessary to dig/fill holes, all the while suffering no adverse inflationary effects."
There's a difference between internal and external affects. Internally, on the home-front, I'd agree with you. But... externally, foreign trade is completely different, and this difference has been seen by the unsuccessful attempts by Hussein and Gaddafi to disconnect their oil trades from USD. The breakwater is being hammered and it's only a matter of time before someone is successful (such that there's a big impact). My best guess is that it will be Russia, teamed up with China (and perhaps Iran?) that does it.
All military dominance is fleeting. Militarism is a path that ALWAYS leads to collapse: expenditures are always greatly externalized, resulting in massive blind spots that eventually rupture- economic hemorrhaging as external trade collapses.
Can it keep going for a bit longer? Sure it can. But that which cannot go on forever, won't. And forever seems to get shorter every day...
And if Azerbaijan wants to get paid in Euros for their Baku crude, what do we do? Look for WMD?
DoChen, my advice is to read/understand Orlov. CHS, TAE, el al have the right idea. The name of the game is local - keep your head down and build support networks. Figure out some skill/talent that will allow you to contribute in some meaningful way ie good enough so that the consensus is that you are 'worthy'. If you're not, or a dickhead, there simply won't be enough sympathy/food to keep our sorry ass around.
"keep your head down and build support networks. "
Been doing that for 20+ years. To extend your point(s). Yeah, I shouldn't feed the trolls, but I love QE because it really does have an effect of boosting local economies in communities like mine (especially the tax-free kind of economy), so bring it.
Ha ha, excellent!
Can't you guys see that MillionDollarBonus is being sarcastic? No sentient being could actually BELIEVE the stuff he wrote.
As the government has no money of its own it must take it from someone else to do a stimulus. It will take it from either current taxpayers or future taxpayers. In both cases the economy is poorer when the government does stimulus projects. Jobs gained in the government sector come at the expense of jobs lost in the private sector. It's like taking a bucket of water from one end of a pool and dumping it into the other end of the pool (spilling a little on the way).
The stimulus is not about jobs. It is about keeping the huge US treasury bubble from imploding. They will debase the currency and use the money to cover the US deficits. The dollar will loose value and the current debt will become smaller in comparison to today. It is called financial repression. This is a recipe to annihilate most of the middle class.
I sincerely hope your being paid for your remarks because if not, you truly are a fool.
Keynesian economics, of which Krugman is a disciple, will never work for one very important reason: for the theory to work, surpluses must be saved during good economic times to offset the dollars spent as stimulus during poor economic times. Picture the situation as equation in equilibrium. You can't have one side of the equation out of balance with the other, you can't continuously spend without saving during times of surplus to fund the spending, and expect the theory to work. It's sheer madness. Keynesian economics will never work because our politicians are incapable of saving during times of plenty to fund episodes of scarcity. Therefore the system is FAIL and so are you.
A-fucking-men. Anyone who stayed awake during high school when Keynes' theories are outlined should have no trouble seeing that the other half of the pump priming strategy is virtually non-existent in government budgeting.
And yet, magical cargo cult thinking seems to be the rule, not the exception. Cause-and-effect is just a primitive superstition. All we need do is boost consumer happy happy thoughts, and manufacturing plants will pop into existence.
So merely "creating" money as well as spending more than you take in revenue is sound fiscal policy.....
It worked pretty well in Rome, in 1920's Germany, Argentina in 2001, and the other times. Those stories all ended pretty well, and I'm sure ours will too.
Someday, cave dwellers will scratch the story onto the side of their walls with sharpened flint and rock hammers or, if they are lucky, they may have metal tools again by that point.
you have to be a troll, no one could be that retarded. Well that's right, Krugman is, so I guess it's possible.
Ok, I get it. Satire.
Effing insane, million tulip bonus. 50 years ago gas and a loaf of bread were what, 20 cents?
That is hyperinflation in my book.
When choosing a mortal sin, I prefer gluttony and greed over envy, as they are active sins rather than passive sins. To each his own, I suppose.
Creation is stimulative, redistribution is not. Look at the price of corn as an example. Take from the producers and give to the non-producers, and the producers jack up the prices of the stuff non-producers buy (food, fuel, etc.). Combined with easy money, you have a perfect system of having the poor and middle class pay for everything through inflation and the destruction of their meager wealth. More stimulus does nothing to address this, just accelerates the stratification between the wealthy and everyone else.
Raise income taxes on the wealthy to pay for more stimulus? They will pay it, but only after passing along the costs to the people who utilize their goods and services, or in other words, on the activities from which they derive their income. The only way to grow in Krugman's economic models is through the direct theft of wealth, either through the confiscation of the assets of it's own citizens or through the plunder of other countries.
Of course, I am just a closed-minded anti-intellectual with no aspirations of joining the preisthood of economists, so my opinions don't carry the weight of the proclamations (fatwas) of an elite mind such as Dr. Krugman. I do know this, however, all attempts to create order in the universe creates the opportunity for more disorder. In other words,
Entropy, Bitchez!
Krugman is gay as hell! Those plaster vaginas on his apartment wall FOOL NO ONE!
I'm not weighing in on the whole gay-straight thing, but isn't it Roubini with plaster vaginas on his wall?
Roubini seems much more like a plaster vagina on his wall kind of guy...
Just sayin'
Edit (found it):
Nouriel Roubini's Wall Vaginas Revealed!I recommend Krugman the next time you're trying to get a quorum for a circle jerk ! Monedas 2011 A snowflake is proof there is a God ! Monedas is overkill !
MillionDollarBonus...I wouldn't give your kids any vaccinations...they are dangerously close to Autism already. You are an idiot that I assume is a school teacher? Probably math? LOL
All this because of a simple reading error. It was Jerry Howard that said it first, and it isn't bonus. It is "million dollar bogus". If you would like an education about the depression. Watch the 3 Stooges and learn.
Oh, my God! This is a good one MillionDollarBonus_. I laughed so hard I nearly wet myself. May I suggest we go into business to help Mr. Krugman once the final collapse happens? My idea is along the lines of the Human Centipede with Krugman attached as the very last link. Our centipede will be lovingly fed with all of the cut out newspaper columns and books written by Krugman over the years. Each link in the centipede will get the chance to savor mouthful after flavorful mouthful of Krugman's wisdom and insight. Krugman, though, will have to personally eat all the $hit he's written over the years. Now, there's got to be quite a few people who would pay to see that.
I haven't quite figured out who we'd get to be the other links in the chain. Maybe we could lay our hands on a couple of laid off GS trading analysts and a K Street lobbyist.
Thoughts?
MillionDollarBonus_ @ 09:52
Who sent you here?, You are an Agent provacatuer for the PTB, or an IDIOT.
Or just a Keynesian Clown Troll?.
Why don't you just run along over to Huff Blow where you belong.
Krugman is a borderline physcopath.
This ship has sunk to the water line. So let's pour more water on the fire.
Parasites (the FIRE and Government free riders) outnumber the Producers (Private Sector Tax Generators). Until this problem is recognized and addressed, Bernanke is a eunich.
Must pump....more.....water IN! Must add more pumps....to sinking ship...more water...
This kick-the-can game proves the insanity of our banking cartel and should be grounds to have them all committed. There is no end to this exercise. It is like continuing to give adrenaline shots directly into thew heart a soldier that has stepped on a land mine and has lost his legs. So what if the adrenaline means that he can keep talking to you, he is bleeding out and will die if you don't treat his real injuries.
What the set of CNBC will look like if there's no further QE, one day soon (replace 'words on teleprompter' with 'QE')?:
Squawk Box: CNBullShit
*p.s. - QE3 is the alarm sounding for the elite who meet to greet and beat to pack up their bags and get liquid, fast; ala Hail Mary, bitchez.
Right! History's biggest 'HUH"?? is about to be delivered Sept 21 when Bubbles walks up on stage and takes a dump on the poduim and walks off.
GOLD and SILVER Bitchez!
I sometimes wonder if you are a real person or a program that has 5 different comments. Like a doll that you pull the string on and get one of 5 messages in seemingly random order.
It is curious how you can stay so on message with virtually no distraction, ever, by any of the topics being discussed. Brilliant!
Yawn.
QE3 blah blah blah...
Gold and silver blah blah blah...
Same shit, different day...
FUCK YOU QE3
FUCK YOU BERNANK
FUCK YOU SAME SHIT
But...........all QE3 is going to do is exacerbate and magnify The Great Unwind.
Good. We need a few scars on the collective psyche. Let it be painful as fuck; let there be unimaginable hardships--most importantly, let us not forget about this shit for a few centuries.
Bring it on, fuckers.
I firmly believe your wish will be fulfilled.
Why curse QE3? Just trade it and try to come out ahead of the inflation it creates. Get some weapons to defend yourself from the social turmoil it unleashes. Build up a large supply basic foodstuff t avoid the scarcity. You have done the first step and informed yourself here. Short of a well-organized mass protest, nothing can be done to stop it anymore.
Oh, I'm doing a little trading here and there, and doing pretty good. The other stuff, pretty much taken care of at this point. As far as stopping it, I don't give a fuck either way. Just do it already, if it's going to be done. I'm just sick to death of speculating about it. We sound like a bunch of Pavlov's little bitches.
Oh My! QEsomehting will come AFTER we see a collective DUMP! If you want to know when, take a look at politics and you'll know!
USD at low 70's, gold at $1800, stocks far too high for QE dump. So lets see, theyve got to tank stocks, lower gold somehow, raise the dollar 10 points, THEN theyre free and clear for QE...all in order to try to get back up to where we are now? This is all a joke, and there are going to be a lot of bagholders.
Nope, no collapse, no bagholders. Just one big slow grind into 1984 while we all lose our minds. Death (a collapse) would be sweet release, and we won't be getting it.
We're already well past 1984.
You can thank your fellow Americans for being more interested in football and sucking off their gay lover than being fleeced by those who are supposed to represent them and protect them from criminals. As I have said 1000 times: This shit only continues because the American people allow it. That my fellow ZH readers is the problem in its most base form.
Why do you let off the hetrosexual americans?
Very Heterosexual
I don't. From my vast experience studying American behavior in the past 3 years of this financial collapse, it seems that gay marriage and giving illegal aliens unearned and undeserved amnesty are the only two issues that seem to be able to get 250,000 people marching in the street in a week's notice. Steal a few trillion and you'll be lucky to get a couple hundred people show up with signs in DC. Tell Jake that he can't marry his gay lover Raul and 250,000 people will be banging on the white house door by next Tuesday. I just call 'em how I see 'em. The elites must be laughing their asses off at how fucking retarded the American people are.
The date doesn't matter much anymore. What's important is that we're on the verge of World War.
And don't forget oil. Oil has to be *low* for QE3 to happen.
you shud like ebrething about QE3 becuz it will help the ekonomy out
By the way, the author of this article gets it wrong: Kocherlakota didn't backtrack on QE. He backtracked on whether he would have again dissented on keeping ZIRP in place until 2013.
It gets old having to correct this shit.
yeah, right, big distinction. he might still vote against, but he certainly isn't fighting passionately against QE3
I did not junk you.
Second, language should be used with precision, which Peter Tchir is not practicing in this article, when he claims something that's not the case.
More importantly, inflation is a big problem for the Fed right now. And QE3 will be interpreted as 'bail out' likely to lead to more inflation, by the masses.
Only the imbeciles who are in charge of monetary policy know what will be, but the leaks coming out are not supportive of the full on retard case Wall Street is apparently clinging to (not even Hilsenrath's piece from the WSJ yesterday, an excerpt that I can't find right now):
http://www.smh.com.au/business/world-business/feds-bullard-qe3-possible-...
https://www.nytimes.com/2011/08/31/business/economy/fed-considered-doing...
Staff members slightly raised their forecasts for inflation for the rest of this year, indicating that the central bank might be especially unlikely to engage in another round of major asset purchases. These purchases generally raise prices, and the Fed has previously engaged in such quantitative easing in part because policy makers worried that prices might otherwise start falling.
good points...yet another reason not to own stocks here
when all you have is a colon fulla shit, everything looks like a toilet.
“"Pooh," said Rabbit kindly, "you haven't any brain." "I know," said Pooh humbly.”
Pavlovian response is so much easier than research! I only wish they had come up with this sooner!
QE3 = Iceberg
Global Financal System = Titanic
We'll "see" a lot less of the QE than what is going on sub-surface.
PM's to da muuuuun!
V
http://aadivaahan.wordpress.com/2011/08/30/humor-me/
toooo da moooooon?
If the negative effect of QE3 will far outweigh the positive effect, why would Bernanke do it?
The looting continues, and he's a bankster. Why wouldn't he?
The amazing thing is that QE3 will make dampen consumer consumption (via increases in prices), while causing margin contractions (via increases in input costs), as well.
Even if another round of bond purchases did happen, what's it going to do - lower consumer (end user) interest rates another 18 basis points? And that's going to spur the willingness of lenders to lend and the willingness of borrowers to borrow?
And yet these Hopium smoking junkies and addicts of Wall Street clamor for it, jonesing badly, with clammy skin and fevers.
Actually, that's not true, Wall Street just needs a major sell the news event to unload a shitload of 12 trillion dollar debt encumbered stock certificates to sheeple, and they think a QE3 announcement is there last best hope for this to happen.
But... isn't this really about top-level strategies? Yeah, Wall Street has power, but these are split up into competing camps. The overarching issue is that of total debt and debt payments. If, as history suggests, the real lever-pullers always look to depreciate currencies in order to make debt disappear.
I'm thinking that enough of the big boys on Wall Street are being pacified to keep them from revolting as a whole while the depreciation game goes forward.
If you owe a small amount you're on the hook. If you owe a MASSIVE amount of money your lender is on the hook. I suspect that there are several high-level Wall Street folks who will look to stick out current policy in hopes that a miracle will happen, that the captains of the ship will pull it out of nose dive; I suspect that they know that it's their only real option, even though it's extremely probable (based on history) to end in one huge crash.
Thoughts?
When I told a friend that there would be QE3 he looked atme and said, "Stop listening to those idiotic gold bugs."
I hope Obama's image is on the new 1000 dollar bills. It will be an honor he genuinely deserves at least.
it would be apropriatly. He's the one who promoted change, so after he's finished with the dollar, it would be a tribute to put him on the small change notes of a 1000.
http://ascendingintellect.files.wordpress.com/2010/10/idiocracy_money5b3...
$1,000 bills? Soon to be known as 'chump change', wont even buy you a 6 pack of Pepsi.
'No matter who you are, you have to accept that QE3 will be implemented blah blah' well in what FORM? NO ONE is giving a number to this diamond encrusted gift to banksters, just that 'it surely must be done'...care to lay out a figure? Or the form it will take?
Personally if you think 'QE' will be in the form of the last, I'd say youre crazy.
These guys never give a specific, just jump across the finish line with 'QE accomplished'...go out on a limb and tell us what you see QE as, $2 trillion? Whats been priced in already, at LEAST that much? So sick of this 'QE is coming no matter what you better ust bend over and take it' sick of all this garbage.
SD1... Did you see this? From GATA...
"WSJournal, NYTimes commentaries urge: Murder gold"
http://gata.org/node/10364
Oh no! The Wall St mafia has called out a hit on gold!
LOL, well seriously theyre between a rock and a hard place...dollar is FAR too low for further monetizing, unless they WANT a collapse which in case go ahead and print, idiots.
I genuinely hope that QE3 won't jack stocks up further. If stocks continue in their euphoria, so will food and energy commodities. That is not good news for consumers and is likely to contribute toward another recession, which we all know is already here!
I'm beginning to believe that the anticipation (or threat, if you will) of QE3 is propping up stocks more than the actual printing will.
Yes, I believe we call that "hopium".
Another recession? Reality check: We're in a Depression with a capital D, and we've experienced a 2.5 year bear market rally in the stock market, but the actual economy is running on fumes and deficit spending. Take out the deficit spending and we're printing negative 10% (at least) GDP. We did not have a recovery, and the Depression is really just now starting to gain some momentum. It will get ugly, and stay ugly for a while.
That's reality.
sbenard @09:53,
That is not good news for consumers and is likely to contribute toward another recession, which we all know is already here!
And your point is?.
IMHO< we have not been in a recession, we are in a DEPRESSION, we have never come out of it since '08, from here it just get's worse.
FED says easing may come ::
http://economictimes.indiatimes.com/news/international-business/recession-2011-federal-reserve-may-ease-further-if-us-economy-worsens-says-lockhart/articleshow/9819211.cms
Zero Hedge already covered that in a complete article.
Lockhart's not even a voting member of the FOMC.
tepco announces "new" plan. interesting proposal considering no human being can stand anywhere near any of these broken reactors without dying...i submit that fukushima will last forever and can never be fixed....they let the genie out of the bottle now and it cannot be put back in that bottle.....i have said it before and i will say it again. japan is doomed because of this...
http://ex-skf.blogspot.com/2011/08/fukushima-i-nuke-plant-water-entombme...
......According to Mainichi, the plan submitted by TEPCO to a special committee of the Nuclear Safety Commission calls for the following steps:
Clean up highly radioactive debris inside the reactor buildings;
Identify and repair the damage to the Containment Vessels and the reactor buildings;
Fill the Containment Vessels with water;
Open the top lid of the Reactor Pressure Vessels and remove the melted fuel.
The NSC committee will consider the plan, and the government will decide on the final plan by January 2012.
My questions:
Step No.1: How? By whom?
Step No.2: How? By whom?
Step No.3: What's the point again?
Step No.4: What melted fuel?
Strangely "collect corium from bedrock" is not on the list.
http://enenews.com/fukushima-worker-camera-holes-cracks-ground-terrifying-video
Uranium is mined from the ground by drilling a hole, pouring down an acid or alkaline solution and then pumping it out.
Contrary to belief, the uranium in the reactor is mostly not any different to that same uranium dug from the ground. There are isotopes that need more precaution and the transuranics will need to be separated which can be done chemically, but for the most part, there's not much fundamentally different between the reactor uranium, and the ground uranium. It could concievably be mined from within the reactor using the same techniques. The major risk comes from its current density. It's simply too dense and is sustaining sparodic chain reactions. Considering the reactor vessels have probably already been breached, there's no extra containment risk posed by the solution attacking the vessel. It's already leaking, so it's already too late to hope to contain it.
I think we have the wrong people working on this problem. We don't need containment experts, we need removal experts. Remove the fuel and the problem disappears. Bring in the miners.
"It may be laid down as a maxim, that wherever a great deal can be made by the use of money, a great deal will commonly be given for the use of it; and that wherever little can be made by it, less will commonly be given for it. According, therefore, as the usual market rate of interest varies in any country, we may be assured that the ordinary profits of stock must vary with it, must sink as it sinks, and rise as it rises. The progress of interest, therefore, may lead us to form some notion of the progress of profit."
The Chinese are going to introduce us to their new ICBM, and it will be called the "QE3."
Seriously though, what can QEx really do for stocks/economy at this point ? (other than the perception) Specifically, what?
Keep the hookers and blow dealers "channel stuffing".
Ain't that the truth. The biflation thing is tough though. Blow prices keep going up and ho prices keep going down. It is a tough life on the street.
Coca leaves only grow so fast and there are new "working girls" daily in this so-called economy.
Delay the inevitable?
Soak up all the Treasuries in order to keep interest rates at their prescribed levels in order not to implode the Fed Govt. That frees up capital to chase, what else, equities. It's a mindless Ponzi scheme. No real value creation and oodles of unemployable cash to be created. But that cash will eventually be just like the piles of CDOs from 4 years ago - worthless.
Consequences of the truth are always made to wait. And that's just what we need to do.
AND BINGO WAS HIS NAME-O.
How the hell else do you think they can sell T Bills @ 2.x% interest ON A 10 YEAR.... while the CPI (their OWN uberly fucked up number) sits above 3%.
That means that in 1 year, your 10 year T bill (and the money you paid for it) is already net negative in terms of inflation and overall gains.
It makes me wonder if anyone BESIDES the fucking Fed is even buying this shit.
The farther you get away from the hedonistic weighting of the CPI the more you realize how much bullshit it is. I think John Williams (shadowstats.com) said that inflation was running past 11% annualized last time I checked. If you want to be realistic, you're really probably at about -8% at the first year. I don't want to imagine what the loss on a 10 year would be 10 years from now.
http://www.shadowstats.com/imgs/sgs-cpi.gif?hl=ad&t=
Did Buffet just buy 1 of every stock? wtf just happened
Fed/PPT stepped in with the ISM release, apparently
"The captain has illuminated the seatbelt sign..."
woah
QE3 Just got priced in!
For the 10th time?
At least.
'Robert Paulson' last nite was scolding and lecturing me about how I didnt know what I was talking about, and if fact 'technicals' ARE what is driving this market. OK Robert....can you tell me what 'technical' just drove markets from negative to 1% up in 2 minutes? Good luck.
At 9:01 am my market display broke, at 9:02 am it showed a 14 point instant rise in SPX. Seriously, what on earth? (Central Time)
You're not supposed to notice. That move was for the crowd who turns in to the nightly news to see if their 401k went "up"
Got a tick by tick of that anyone?
I don't have a tick by tick on that hyper drive jump, but yeah the ISM report and GM sez 18% sales increase...
WOW! So absolutely NO need for QE3 at all with those kind of stellar all-time record high numbers! ISM spectacular, and GM jumping sales almost 20% hell its economic boomtimes!!!
Fed is only hesitating on QE 3 so they can claim they are responsible. In Europe, the central banks are begging the sovereigns to cut spending and undergo austerity. Not for America, where the Fed and Obama administration are on a spending binge to nowhere that will only end in a bigger disaster.
It's a game of attrition: I (US) have more wheat in my silo than you (EUR) have in yours.
We have basically no grain reserves at this point, and also we're bankrupt we have no money so talk of further money 'debt creation' only digs a deeper hole. Only lunatics thinks any of this is workable.
Has anyone ruled out the possibility that they kick the Euro Debt blow-up down the road another 6 months and the American economy doesn't completely fall into the shitter? I don't see the economy collapsing completly without another credit crunch. Recession/global slowdown, yes absolutely. Another stock slide and bear market? Probable. But unless there is a another banking crisis the world economy will not grind to a complete halt like it did in '08.
Just throwing it out there..
Full disclosure: I'm all in cash and PMs atm
The world didnt grind to a halt in '08, the banksters got in a bind on their derivatives, and decided to pull off the biggest ripoff in world history by tanking stocks markets, then holding a gun to everyones head demanding the free checkbook be turned over immediately, no questions asked.
Now, the free checkbook is called 'economic policy' and without a few QE's every year, there is no economy at all.
The short term paper market was non-existant in the fall of 08.' Banks were hoarding cash. In a run of the mill recesion that does not happen. What they also did with the bailouts was suspend belief. People are ignoring the fact that the banking problems weren't ever fixed. It will take something much bigger than a recession to bring the whole house of cards down or bring on QE3.
The derivatives market will again, someday soon, blow up. And a bank will fail. And we'll have to save another fucking AIG. And our central bank will monetize more debt. All I'm saying is they delay it much longer than we think they can.
Or, not delay it for long at all when the mid east erupts in mushroom clouds this month.
That avatar is very well designed.
Google search.. I got lucky
QE3, then QE4, then QE5, etc.
Just the lack of originality is depressing. Even a one-trick pony can learn something new.
Is 1800 the new floor for Au, and 40 for Ag? Seems like some acceptance going on. Joy!
Well if they want to keep yapping about money printing every 15 minutes yea PM's will do great. Their main problem is they cant have it both ways.
Yeah, $1,800 floor for Au. Imagine, a floor that's 50% MORE than what Roubini stated it could NEVER be ($1,200).
the kids are in charge of the candy store
Yes, and they're hypoglycemic.
While QE will be bullish for stocks (and it will happen), it will only enrich the already rich, since all the little guys have exited the market. As now only the rich get richer, will they also become TBTF?
QE will happen how, can you give some specifics?
It never stopped. TheBernank has been surreptitiously feeding the hand that bites him for years. Right now, Easing is going on. A term like 'Quantitative Easing', means only one thing, really: Do anything your banksters tell you to do.
It's not that TheBernank 'does' Q.E. it's that the Primary Dealers tell the Bernank what they need from the FED and he does it.
All the rest is just Theater of the Absurd.
Right, well Im more talking about this idea that Bubbles Bernank walks out on Sept 21 and unveils a couple more free $trillion to be gobbled up by Wall St stocks. Simply isnt going to happen, now QE is only ZIRP and daily stock and bond manipulation...there will be no diamond encrusted Tiffany box unveiled.
There will be no QE3 (defined as being something on the same scale as 1 and 2). Get it through your thick skulls.
P.S. The software for this site absolutely sucks.
Exactly, while everyone is lulled into the total certainty some big diamond encrusted free gift will soon be wheeled out by Bubbles, it in reality will be another huge disappointment....at best some boring rate adjustment or whatever. 'We'll hand hold stocks and bonds with ZIRP blah blah' yea big deal.
SD, How they gonna keep equities propped and interest rates pinned at the same time? This levitation is impossible to sustain...
Equity prop is just to keep the 401K and pension bathrobe brigades placated a bit longer until shearing time.
The dollar is far too low for QE, and they know it.
Ummm...so how long before the anticipatory hot-air balloon goes poof? People are only so stupid, aren't they?
But by that time, the real economy will be doing well enough that it won't be as big a disappointment to equities as it will be to PMs.
Discussion, or are you a salvo-only bovine?
mayhem, is that one of the cows from the movie Top Secret? one of the first and possibly the funniest flicks ever, w/ val kilmer in the "lead" ?
http://en.wikipedia.org/wiki/File:Top_Secret!84.jpg
http://en.wikipedia.org/wiki/File:Top_secret_ver1.jpg
or is that milk dud from a diff spy flick? maybe i'm just getting so old, all the heifers look the same! any cow in a storm!
I was thinking it was the growth-hormone induced cousin to the heffer on the cover of Atom Heart Mother.
Lets see, TARP, QE1, QElite, QE2 QE2 ongoing....all totaly failures. HEY I got it! Lets try more QE!
Dont forget all those "liquidity injections" in 2007.
I would basically say that QE3 is actually off the table. The fed still has ways to manipulate the economy without printing increasing the monetary base. At this point it is all about incentivizing private investment, because currently there is no incentive to hire or spend until 2013, when rates will start to go up. Currently, a company can just say, "Why borrow and spend today when it will cost the same in almost 2 years, where I can use that cash to make money until then?" Incentives are the patchwork of capitalism, incentives drove the American dream, and incentives are what keep us going. There is a reason the government is inefficient and the private sector is much more so. The incentive structure to do things quickly does not exist in the public sector, and that is what draws it down. In all, the Fed needs to figure out a way to incentivize lending, borrowing, and growth, without increasing the monetary base.
And also remember that we don't want to topple any more regimes. One tactic that has not been ruled out is lending to companies directly through the fed at a haircut to market rates, which would spur growth. The other idea that I think garners attention is QE, but untraditionally. This would entail the currency that devalues over time idea, basically giving people x amount of money that devalues at a rapid rate (10% per month or so) and that incentivizes people to spend now, feel confident, create a wealth effect, and restore confidence. We need confidence and we also need incentives.
Exactly its just carrot on a stick, the FED is loving having it both ways rumors of QE is just fine to them, while they manipulate stocks and bonds with ZIRP behind the scenes...and making everyone believe this all just goes on and on forever.
There are two things you have to understand about Ben Bernanke. He understands the effects of deflation but he also understands the effects of poor communication of policy. The market will always know what the Fed wants to do before they do it. They will always have time to react. On that note, Bernanke would not un-purposefully inflate, or for that matter deflate, the economy without telling us about it. He is a conductor, an orchestra, an architect of the US economy. There are things he can and can not do, and he can not print more money. However, he saved us once and in Bernanke we trust. I hope.
He is a conductor, an orchestra, an architect of the US economy
Dear Audience, " I am planning to play the same tune for another 2 years (ZIRP).
Audience gets up and leaves. Bernanke is an academic fuckup.
"There is a reason the government is inefficient and the private sector is much more so."
Yeah, just look at the PRIVATE banking sector and the PRIVATE "defense" sector.
For fucks sakes, people, figure this shit out! It's NOT private vs. public, it's SMALL vs. BIG!