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As Part Of Its NEW QE Q&A, Goldman Warns Of Possibility For $50-$75 Billion "Flow" Program

Tyler Durden's picture




 

Not like it should come as any surprise that the bank that first among peers "discovered" that flow, not stock matters, implying the Fed may literally never be able to stop monetizing, is expecting the FOMC to "ease monetary policy on June 20", but nonetheless here is the full just released Q&A from Goldman's Jan Hatzius, who just happens to be a Pound and Pence drinking buddy of former Goldmanite Bill Dudley, who just happens to run the New York Fed. Connects the dots. Implicit is that a big dollop of Large Scale Asset Purchases is imminent. That said, if the Fed does disappoint on June 20, and merely extends the maturity of bonds that it will sell as part of a Twist extension from 3 to 4 years, as the bond market appears to be implying (as first warned by Zero Hedge), then all bets are truly off. On the other hand, note where Goldman says: "However, it is also possible that the program would be specified as a "flow" of purchases of perhaps $50bn-$75bn per month." If that happens, gold is going to $2000, $3000, hell, $10,000 very soon, as it means the Fed will not stop printing ever again. Period.

From Goldman:

FOMC Preview: QE or Not QE (Hatzius)

We expect the Federal Open Market Committee (FOMC) to ease monetary policy on June 20, in response to the weaker economic data and increased downside risks from the intensifying crisis in Europe.

The form of the easing is a closer call. Our baseline is a new asset purchase program that involves an expansion of the balance sheet, but an extension of Operation Twist and/or a further lengthening of the short-term interest rate guidance in the FOMC statement beyond the current “late 2014” formulation are also possible.

Q: Will the FOMC ease monetary policy?

A: Probably. Although renewed Fed easing by mid-2012 has been our forecast all year, we felt more uncertain about this view a few months ago given the temporarily better data and the apparent shift of the Fed's reaction function in a more hawkish direction. But at this point, we would be quite surprised if we saw no easing this week.

Q: Why?

A: In her June 6 speech, Vice Chair Yellen listed three alternative criteria for further easing:

…[i]f the Committee were to judge that the recovery is unlikely to proceed at a satisfactory pace (for example, that the forecast entails little or no improvement in the labor market over the next few years), or that the downside risks to the outlook had become sufficiently great, or that inflation appeared to be in danger of declining notably below its 2 percent objective... (emphasis ours).

We believe criterion 1 has been met. As shown in Exhibit 1, we expect the committee to lower its forecast for real GDP growth and raise its forecast for the unemployment rate significantly in the Summary of Economic Projections to be collected at the meeting. If we are right in thinking that the "central tendency" forecast still shows the unemployment rate at 6.9%-7.6% at the end of 2014, many committee members may view this pace of improvement as insufficient, and be inclined to ease accordingly

Exhibit 1: Out Estimates for the Fed's Summary of Economic Projections…

Criterion 2 may also have been met given the deterioration of the European crisis and the tightening of financial conditions of about 30 basis points (bp) since the April FOMC meeting. This tightening is a key reason why our statistical model of FOMC decisions implies that additional easing in June is likely.

Criterion 3 has probably not been met in the committee's view. As shown in Exhibit 1, we expect only the headline inflation forecasts to be revised downward, while the core inflation numbers are likely to be largely unchanged. However, our own view is that there are signs that underlying inflation pressure is actually starting to come off quite sharply, so this criterion may well be met at a subsequent meeting.

In addition, it is important to note that a decision not to ease is tantamount to a tightening. The reason is that the impact of unconventional easing--unlike that of conventional short-term interest rate policy--"decays" over time. This is the implication of our own research, and Figure 9 in Yellen's speech shows that Fed officials have come to the same conclusion. We estimate that this "decay" would push up the 10-year Treasury yield by about 30 basis points (bp) between now and the end of 2013 if no further balance sheet action is taken and the forward guidance is not extended, and Yellen's estimates seem to be similar.

This decay factor kicks in only gradually, so one could argue that it need not be a reason to expect further easing in the near term. However, there are two other reasons besides the decay to believe that the impact of not acting could be sizable even in the near term. First, the market now clearly discounts some probability of easing, so financial conditions would likely tighten if the Fed did nothing. And second, we have found that a small part of the impact of asset purchases on bond yields occurs via the "flow" of Fed purchases than the "stock" of Fed holdings; this implies that very long yields should rise when the purchases stop.

Q: So how will they ease?

A: This is much more uncertain. However, our baseline remains a return to balance sheet expansion, with purchases of mortgage-backed securities (MBS) and Treasuries. There are three reasons why we believe MBS purchases would feature prominently. First, these may be more powerful than Treasury purchases in boosting economic activity on a dollar-for-dollar basis, as MBS yields are not nearly as close to the zero bound as Treasury yields. Second, Fed officials have repeatedly mentioned housing as a key headwind to a stronger recovery, so a policy that directly targets housing would make sense. .Third, there may be more support among the public for MBS purchases because of the implied support for US homeowners as opposed to government deficits.
That said, some Treasury purchases would probably be included as well; after all, the stock of Treasuries is rising much more quickly than that of MBS, and Fed officials may therefore want to provide some additional support for this asset class.

Q: How large will the program be?

A: If it is specified as a "stock" of purchases, we would expect a similar size as in past programs, i.e. $400bn-$600bn over 6-9 months. However, it is also possible that the program would be specified as a "flow" of purchases of perhaps $50bn-$75bn per month. Although there has been little talk about the latter option, it enables the committee to respond more flexibly to changing economic conditions and may be optically more attractive if the committee is worried about a political backlash domestically or abroad against further balance sheet expansion. Economically, the effects of the two options are likely to be quite similar because financial markets are forward-looking; for example, if markets believe that a purchase flow of $60bn per month will be sustained over 8 months, this would be equivalent to a $480bn stock announcement.

Q: Will the purchases be sterilized?

A: This is a tough call, but on balance we think yes. The argument in favor of expecting sterilization--which involves financing a Fed balance sheet increase via term deposits and/or reverse repurchase agreements as opposed to yet more excess bank reserves--is that the cost-benefit analysis looks quite promising. Economically, we believe the choice whether to finance a balance sheet increase via overnight liabilities (bank reserves) or 1-week/4-week liabilities (reverse repos/term deposits) matters very little. However, there is a belief among some investors and commentators that increases in the monetary base are more inflationary than increases in other types of Fed liabilities; if so, sterilization may be a low-cost way of reducing the risk of a rise in inflation expectations or a political backlash against "printing money."

The substantive argument against sterilization is that it would put upward pressure on interest rates at the very short end of the yield curve (because the Fed would borrow additional funds at a 1-4 week maturity). Moreover, there has been relatively little talk about it since a Wall Street Journal article in March that floated the idea, so it is possible that the idea has fallen out of favor.

Q: Are they also likely to extend the forward guidance from the current "late 2014" to "mid-2015"?

A: This is not quite our baseline but very possible, especially if the committee decides against renewed balance sheet expansion (see below). After all, such a shift would roughly restore the forward guidance to the same three-year horizon as at the January FOMC meeting, when the "late 2014" formulation was first adopted. At a minimum, we think that the funds rate forecasts from individual FOMC participants in the SEP are likely to move toward a later exit date (see Exhibits 2).

 

Exhibit 2: …and the Timing of the First Rate Hike

Q: What if they decide against expanding the balance sheet?

A: The leading alternative to balance sheet expansion is a small extension of Operation Twist, i.e. a sale of the remaining $200 billion or so of Treasury securities with a remaining maturity of 3 years or less, and a corresponding purchase of longer-term Treasuries and/or mortgage-backed securities.

If the committee decides to confine itself to an extension of Operation Twist, this would further increase the probability of a lengthening of the forward guidance from the current "late 2014" formulation to "mid-2015" in order to reduce the risk of doing too little and also to mitigate any upward pressure on short-term rates that might otherwise result from selling yet more short-term Treasuries.

Even so, we believe that an extension of Operation Twist could well be insufficient on its own and could thus be followed by additional easing action before long. Recall from the discussion above that the "decay" of unconventional policy could boost 10-year yields by 30 basis points over the next 18 months. Using standard estimates, a further $200bn twist combined with a lengthening of the guidance would offset only about half of this impact. More than this is likely to be needed eventually.

Q: Could the committee make an extension of Operation Twist more powerful by selling intermediate-maturity Treasuries (e.g. 4-years)?

A: In principle yes, but we do not find strategy very attractive. The main reason is the risk of putting upward pressure on intermediate yields and thereby sending very mixed signals about monetary policy. If the committee wants to do significantly more than implied by a further $200bn twist alone, balance sheet expansion is likely to be needed.

Q: Do you expect a cut in the interest rate on excess reserves (IOER)?

A: No. We believe that the committee views the forward guidance as a better way of mitigating upward pressure on short-term rates than a cut in the IOER because it seems less likely to interfere with money market functioning.

Q: Do you expect additional Fed easing to be effective?

A: Only moderately. While we believe that a sufficiently large program focused on the mortgage market would help, it is unlikely to be very powerful. That doesn't mean Fed officials shouldn't do it, since we view the costs of additional easing as low. The risk of inflation is remote, and even when it becomes less remote Fed officials should be easily able to tighten policy sufficiently.

But it does mean that it makes sense to think about other forms of policy easing. Obvious candidates would be fiscal policy or purchases of non-government guaranteed assets, but these require the cooperation of Congress and are therefore probably not feasible. Instead, a move in the direction of "unconventional unconventional" options holds more promise. These include the Evans proposal of promising not to raise rates until the unemployment rate has fallen to a specific level and a nominal GDP level target. We do not expect these to be adopted in the short term, but they could be more effective than balance sheet action and date-based forward guidance on their own. They may therefore represent the next frontier for Fed policy should the recovery continue to disappoint.

 

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Mon, 06/18/2012 - 19:15 | 2537742 Paul Atreides
Paul Atreides's picture

Humanity should warn Goldman of the possability of 50-75 of its top executives could soon be hanging from the gallows.

Mon, 06/18/2012 - 19:27 | 2537790 Troll Magnet
Troll Magnet's picture

humanity should be warned that goldman is full of shit. they won't announce QE on june 20th. not at current levels. no way. no how.

Mon, 06/18/2012 - 19:47 | 2537828 Comay Mierda
Comay Mierda's picture

omfg another goldman qe prediction?  mkt prob crashing soon, they are offloading their equity positions on to the muppets.  but dont worry, uncle benny will save you

 

Mon, 06/18/2012 - 20:04 | 2537865 Colombian Gringo
Colombian Gringo's picture

Yep, I smell pump and dump GS style, raise prices and then shit all over their clients.

Mon, 06/18/2012 - 20:11 | 2537885 nope-1004
nope-1004's picture

Can someone answer this for me?  Can the Fed engage in an asset purchase program (monetize) and not publicly disclose they are doing so?  Seems to me the world can't make it through the next month without ongoing QE, so it's my opinion that they are just simplying hiding the truth.

Any validiity to my suspicions?

 

Mon, 06/18/2012 - 20:25 | 2537912 fonzannoon
fonzannoon's picture

Jim Rogers has been making that case for a few years now, and he is one of the few that I put some faith into.

Mon, 06/18/2012 - 21:52 | 2538110 earleflorida
earleflorida's picture

yeah, the same ole jolly [total shill] roger of the intrepid sorcerer soros', 'quantum fund' - now humbly sharing his lamentation's once again on CNBC, btw is bought and paid for by the TBTF's ,...

Mon, 06/18/2012 - 22:04 | 2538145 fonzannoon
fonzannoon's picture

my cynicism goes only so far. Rogers is a good dude. he is getting up there and wants a bulwark against mortality. if i am wrong for listening to a guy telling me to buy real assets i give up

Mon, 06/18/2012 - 23:42 | 2538461 engineertheeconomy
engineertheeconomy's picture

After the Mexican Cartel beheads all the Goldman sacks then we can have them behead all the Central Bankers

Mon, 06/18/2012 - 20:38 | 2537940 ebworthen
ebworthen's picture

No doubt shadow QE, beside the currency swaps and back door operations.

The FED can do whatever they want, they are a private corporation that answers to no one.

Don't let the CONgressional testimony fool you; it is mob underlings pretending to ask the front man of their mob bosses real questions.

"No, we are not roughing up citizens and businesses to pay 'protection' money, that would be illegal."

*COUGH*

Mon, 06/18/2012 - 21:00 | 2537978 Jake88
Jake88's picture

I believe that Bernanke was asked a similar question by congress a few months ago. The question was something like if the Fed bails out Europe are they required to get congress's approval. His answer was approximately that there is no requirement for the Fed to seek congress's approval and no requirement for the Fed to inform congress, but that the Fed would graciously inform congress anyway. Big of him.  It was a rather ballsy declaration of his own power and authority. I was dumbfound.

Mon, 06/18/2012 - 23:49 | 2538476 engineertheeconomy
engineertheeconomy's picture

What he was really saying is that the Dollar will be the future  One Global Currency, and that all other Fiat Currencies will soon be retired. What he is not saying is what he is going to purchase with the 950 Quadrillion Dollars worth of foreign currencies that he will recieve for his newly printed dollars. Global Land Grab?

Mon, 06/18/2012 - 21:01 | 2537981 Marginal Call
Marginal Call's picture

They do that all the time.  Like trillions sent to Europe that we don't hear about until years later.  

 

If they really want to stimulate the economy for $70 billion a month,  they should randomly pick social security #'s from low income earners and give out $500,000 cash to 140,000 people.  But it's got to be to people who are of the ghetto/trailer park variety who'll blow through the whole thing in a year or just put a Brewster's Millions clause to it for middle class earners.  Yeah, it's on a prepaid debit card that expires in 60 days.  All the previous stimulus went straight into Jamie Dimon's pockets and hasn't moved since-and wasn't worth fuck all. 

 

Filed your taxes last year?  Win cash prizes.  TAX FREE Drawings Every Friday from the FED.  

Tue, 06/19/2012 - 07:33 | 2538837 eclectic syncretist
eclectic syncretist's picture

The Fed exists to enrich the banks at the expense of the people.  The rhetoric about employment and price stability is all smokescreen and mirrors to distract our attention away from this simple truth.

For instance, who does zero percent interest rates benefit most, and who does it hurt most?  It benefits the bankers because they are the only ones who can borrow at zero (= for free), and they then lend it out at 10+%.  It hurts the people who work hard and save for the future the most because they no longer have any interest income for the money that the save and the banks use as collateral for even more loans.

To answer your question, the Fed is not interested in stimulating the economy beyond what would be beneficial to banks, anymore than a parasite is interested in keeping it's host healthy.

Mon, 06/18/2012 - 20:32 | 2537928 mcguire
mcguire's picture

what is interesting is that GS may be right, and they may annouce a "flow" based QE (QEflow)... 

but the problem is that when the masses see the number, ie $80bil vs. $600billion, it will react negatively!!!

why?  because while "flow" may be important to bond prices, it is "stock" that is important for ES, PMs, etc... 

flow is methadone.  stock is crack.  

Mon, 06/18/2012 - 22:14 | 2538181 earleflorida
earleflorida's picture

did ya ever hear of... or see a 'horse`trader' givin up the poppy for an, 'in the flow' show-place --- and, as far as stock is concerned... the casino's addict only focuses on his habit --- the Quick`Easy is all that he counts

Mon, 06/18/2012 - 19:51 | 2537847 Whoa Dammit
Whoa Dammit's picture

The "Floe" program, making that iceberg they are heading for just that much bigger.

I can't believe the nerve they have to say that buying more of the old MBS garbage from the banks' balance sheets will be more palatable to us. 

And please note the "n/a" under long term inflation in their BLS worthy chart.

 

Mon, 06/18/2012 - 19:59 | 2537854 CPL
CPL's picture

They don't have to announce anything anymore.  All the central banks act as one now.  The US Fed can print for any central bank authority as can any other banking authority can print for the Fed.   Besides the QE has been flowing the whole time, now the problem is keeping the money printing and churning without setting off a short cover on gold and silver.  There is already enough liquidity in the system to have gold sit at 6k an ounce and silver at 450...that agreement was done in Jan while everyone was worried that countries that can't afford coal and diesel want to sign off on NDAA or whatever half demented smoke and mirror show dreamt of that week.

 

Look at the cost of food, does it look like the TPTB is ceasing the print job?  Silver?  Nope...still rising.  Gold?  Nope...still rising.

 

The pensions that are owing must be inflated away faster than people can collect them, which means it has to happen FAST because that's money owing that was never saved.  Pretending like pension are in some untouchable lock box is naive, pretending they haven't been printing the whole time is just plain silly.

Mon, 06/18/2012 - 20:05 | 2537869 max2205
max2205's picture

Sell into GS's BS

Mon, 06/18/2012 - 20:13 | 2537890 Beevreetr
Beevreetr's picture

Not my cup, not my problem.

Mon, 06/18/2012 - 20:17 | 2537896 unrulian
unrulian's picture

Two banks one cup

Mon, 06/18/2012 - 22:24 | 2538212 SmokeThatHog
SmokeThatHog's picture

That's some classic shit, literally.

Mon, 06/18/2012 - 19:13 | 2537744 Manny
Manny's picture

Look who made it to #2 on this list. Although i think should have been #1

You need to go to the slideshow at the end of the article for the list.

http://www.huffingtonpost.com/joshua-m-brown/best-financial-journalists_...

 

Mon, 06/18/2012 - 19:19 | 2537759 sitenine
sitenine's picture

Congrats Tyler!  You and Max should do another interview ;)

nostalgia: http://maxkeiser.com/tag/tyler-durden/

Mon, 06/18/2012 - 19:27 | 2537791 El
El's picture
Williambanzai7 made it on the list, too, at number 10. :) Congrats, guys and gals.
Mon, 06/18/2012 - 19:42 | 2537823 sitenine
sitenine's picture

WB7 came in 4th - the slides are out of order.

Mon, 06/18/2012 - 19:50 | 2537845 Wakanda
Wakanda's picture

Rock on ZH!!!!  : - )

Tue, 06/19/2012 - 00:53 | 2537990 blindman
blindman's picture

..: " when life looks like easy street
there is danger at your door. " ...r.h.
Grateful Dead - Uncle John's Band
http://www.youtube.com/watch?v=TSIajKGHZRk
.
Blair urged by Murdoch to rush into Iraq war
Posted on June 17, 2012 by maxkeiser
http://maxkeiser.com/2012/06/17/blair-urged-by-murdoch-to-rush-into-iraq...
.
re stock and flow. as flow increases
stock decreases, but not with a sovereign.
( the model of stock and flow seems to be
a myopic view of the natural cycles that exist
in nature, the stock being a concept, noun,
the flow being a verbe, but actually the same
thing, meta-conceptually held as a cycle, as
in the hydrologic cycle, the carbon cycle, the
nitrogen cycle, etc..)
that is the beauty of sovereignty and why
fascism is so popular with the private and
public servants and sectors. a sovereign
has all of nature as its stock and manages
the flow. where structure and labour are
required to direct flow there is religion.patriotism.
education.law.politics.entertainment.production.
distribution. and government.
regarding legal tender liquidity as debt in
saturation they just steal what is needed now,
systemically, from the current stock and flow it to
the insiders for the insiders in the fields of
religion.patriotism.
education.law.politics.entertainment.production.
distribution.
and government.
.
so in the money creation mechanism, the stock
and flow, "money" is borrowed into existence, to be
paid back at principal and interest in the future.
that done by the individual in collaboration with
the governmental and financial "systems". but
when saturation is achieved the flow, which is
the verbe, terminated, stops. saturation.
nature demands a fall, a fallout, a precipitate
as there is no further solubility. no further
saturation possible, it must rain, it must fall.
but, the con and scam is of the image that this
cannot happen. why? because of derivatives.
they demand the underlying retain their image or
destroy the next level of "money" creation, liquidity,
that the financial world has created out of thin air
(sovereignty hijacked by corporate financial industry).
war maker is back in town. j.t.
the base money being stuffed into the system to
conceal the nature of the system itself and the
transference mechanism at play whereby the global
fiat financial system creates fictitious liquidity
and solvency divorced from the notion of "nations".
we see nation building at a time of the destruction
of the system of national sovereignty. wild shit and
global deception afoot.
that time element is the killer, along with that
interest element. stock and flow.
it is as if the rains in the hydraulic cycle will
not be allowed to fall, ( but we have helicopter
drops on the elect and elite, as if this was
liquidity, and it has been said, "politics is
show business for ugly people." i say economics
is math and statistics and show business for sociopaths,
some being attractive and some ugly.( the condemnation
here is meant only for myself ) i guess you could say
i am a self hating non-jew, i hope that is not anti-semitic. anyway..
the key to fortune has been and remains today
confusing the populations in the present to
steal in some either straight forward way or in
some over time ponzi arrangement, the great fortune
that is typically termed "treasury" or "sovereignty",
to subordinate that from god's creation, the earth, sky
and people, to an alien and foreign idea of collectivist
orientation and distant and foreign control, bringing
into question legitimacy and integrity.
all isms are dependant on ubiquitous conformity
and adherence to same, this for the predictive power
of positioning propitiously. (trust)
we don't have that in any broad or global sense and
never will. they don't care for trust and integrity
anyway, direct control and punishment are their
alternatives. those who think fascism will evolve into
a better, more enlightened state are insane, leadership
by superior paranoia and fear worshipers.
who owns the stock and flow anyway?
economy is impossible when price discovery
is manipulated and systemically opaque.
"so what". miles davis.

Mon, 06/18/2012 - 19:13 | 2537746 f16hoser
f16hoser's picture

This is why I'm a "Stacker!" I'ld rather be two years early than than one day late to the PM's Party.....

Mon, 06/18/2012 - 19:22 | 2537771 CrashisOptimistic
CrashisOptimistic's picture

You mean selling your gold?  You want to do that one day before global concerted action imposes a 60% tax on all gold transactions.

This would be done if gold ever becomes significant enough to warrant the action.  Given insignificance, it's not worth thinking about.

Mon, 06/18/2012 - 19:29 | 2537792 bdc63
bdc63's picture

Windfall profits tax baby ... I mean bitchez ...

Mon, 06/18/2012 - 20:26 | 2537913 Its_the_economy...
Its_the_economy_stupid's picture

Black Market.....Bitchez.

Mon, 06/18/2012 - 20:56 | 2537972 nmewn
nmewn's picture

Suppose corrupt bureaucrats and regulators announced a market and nobody came...just completely ignored them as they sat there stunned with their hands out waiting for their cut.

Why, think of the possiblities ;-)

Tue, 06/19/2012 - 05:56 | 2538777 hamurobby
hamurobby's picture

Sounds like a Greek tragedy..

Mon, 06/18/2012 - 19:45 | 2537827 tmosley
tmosley's picture

Then why mention it?

Oh yeah, you want to instil as much terror in everyone as you possibly can, so you can sell them your death worship claptrap.  I almost forgot--flimflam men absolutely THRIVE on terror.

Mon, 06/18/2012 - 19:13 | 2537747 Rainman
Rainman's picture

Nice plan...desperation and Hail Mary passes...as far as the eye can't see.

Mon, 06/18/2012 - 19:16 | 2537750 ekm
ekm's picture

FLOW matters as long as there is still something to buy. However, if EVERYTHING has already been bought, neither flow has any effects.

I think everything has already been bought by Primary Dealers, hence the only thing to do is engineer a collapse of 1 or 2 primary dealers as they did in 2008 with bear stearns and lehman.

 

Also, HILSERNRATH just spoke.

Mon, 06/18/2012 - 19:46 | 2537833 Plymster
Plymster's picture

If everything has been bought, they can just sell it to each other again to jack up the price.  Flow would mean that consumables (food, fuel, and materials) have a constant bid, so that non-consumable assets (equities and bonds, for example) never need drop in value.

Mon, 06/18/2012 - 20:28 | 2537840 ekm
ekm's picture

Thx a lot.

I was expecting somebody to provide feedback. I'm having this idea and I'm testing it on ZH. I hope others provide feedback.

Mon, 06/18/2012 - 21:09 | 2537991 Everybodys All ...
Everybodys All American's picture

New debt is being created constantly. Therefore the need for flow. Without new debt creation government spending grinds to a halt. Your hypothesis fails miserably.

Mon, 06/18/2012 - 21:14 | 2538005 ekm
ekm's picture

Thx a lot. I appreciate the feedback.

Mon, 06/18/2012 - 21:28 | 2538043 fonzannoon
fonzannoon's picture

Hey ekm good for you. No joke. I have floated some of my own hypothesis on here only to have similar feedback. It says a lot to be able to take criticism like a grown up. That to me is more interesting to see than the theory getting debated.

Mon, 06/18/2012 - 21:44 | 2538078 ekm
ekm's picture

Fonzannoon

I am addicted to learning. There is no other way to learn but by imagining something and throwing it out there for criticism.

Mon, 06/18/2012 - 19:17 | 2537754 slaughterer
slaughterer's picture

Uh, this is the same Goldman which has been wrong on nearly all of their 2012 calls, leading their clients to massive losses.  Could it be that they are forecasting the excact opposite of what will happen?  Nowhere do we see better than on Zh how GS fades all of their calls to the detriment of the suckers who take them literally.  

Mon, 06/18/2012 - 19:30 | 2537784 Golden Balls
Golden Balls's picture

The fed is busy manurfacturing 350 million blue pills for rapid distribution.

Mon, 06/18/2012 - 20:09 | 2537879 max2205
max2205's picture

2% mortgages for all!!!! Let them eat mortgages

Take the I out of P&I

Mon, 06/18/2012 - 20:35 | 2537936 junkyardjack
junkyardjack's picture

I'm waiting for -2% mortgages so my house can pay off itself...

Mon, 06/18/2012 - 21:45 | 2538081 nmewn
nmewn's picture

A negative four percent note does it in half the time...lol...actually I'm thinkin about just squatting somewhere just to be radical.

Up twinkles? ;-)

Mon, 06/18/2012 - 22:42 | 2538270 BidnessMan
BidnessMan's picture

A 4% 30 year fixed rate, 95% LTV and no PMI, does the same thing when inflation goes to double digits.  Actually tax deductible rent. With inflation at 5%, 10%, 25%, 50%+ a month, won't take long....  The gas for the drive across town to pay off the mortgage will cost more than paying off the mortgage...

Mon, 06/18/2012 - 19:31 | 2537799 bdc63
bdc63's picture

The FED doesn't act until we catch the Swine Flu from the PIIGS, and our stock market is in freefall.

That's my call and I'm stick'in to it.

Mon, 06/18/2012 - 19:20 | 2537762 cherry picker
cherry picker's picture

I can smell the fear.

These guys aren't idiots.  They throw this stuff around to confuse, yet they can see things unravelling all over.  It is unraveling slowly as freeways are still full, but there have been 8 suicides connected to bank failures in Korea, 25% unemployment or thereabouts in Spain and Greece.  Portugal needs some more help. There are more standing in line.

It is like a disease. 

We need the printing to insure food stamps, military, health care and benefits are honored.  Imagine if the feds credit cards or checks started bouncing or merchants quit accepting them?

While the world watches the problem areas, the USA is the one to really keep an eye on. 

Mon, 06/18/2012 - 19:22 | 2537763 Arnold Ziffel
Arnold Ziffel's picture

Europe's crisis is about wealth, not growth
By Spengler

 

 

"The US government misused government subsidies via Freddie Mac and Fannie Mae to promote the housing bubble, and looked the other way while financial institutions and rating agencies created a trillion-dollar house of cards in levered mortgage-backed securities. The weaker members of the eurozone used their enhanced borrowing powers to pile up daunting levels of government and bank debt.

 

The housing bubble eventually had to pop, and the result was a $6 trillion write-down in American wealth. Europe's demographic problem is far worse. Europe also requires a massive reduction in private wealth, as Nobel Prize winner from Columbia University, Edmund Phelps, explained in a January 12 op-ed in the Financial Times.

 

The issue, rather, is who takes the hit when Europe's illusory wealth is written off."

 

http://www.atimes.com/atimes/Global_Economy/NF19Dj04.html

Mon, 06/18/2012 - 19:55 | 2537836 Winston Smith 2009
Winston Smith 2009's picture

"The issue, rather, is who takes the hit when Europe's illusory wealth is written off."

And when OUR illusory wealth is written off.  What's been happening thus far should give you a perfect idea of who they intend to take the hit.  Everyone but the perps.

And, BTW, Europe's problem is the same as ours; not wealth, but debt.

Mon, 06/18/2012 - 19:20 | 2537764 I am Jobe
I am Jobe's picture

Can i have a doobie please. WTF is this shit

Mon, 06/18/2012 - 19:21 | 2537766 Bay of Pigs
Bay of Pigs's picture

Don't tell me, the goldtards have called it correctly again?

 

Mon, 06/18/2012 - 19:26 | 2537787 nmewn
nmewn's picture

(Maxwell Smart) I asked you not to tell me that!!!

Its all about the flow now.

Mon, 06/18/2012 - 19:47 | 2537834 Kali
Kali's picture

The Spice must flow.

Mon, 06/18/2012 - 20:04 | 2537864 Quisat_Sadarak
Quisat_Sadarak's picture

Classic!

Mon, 06/18/2012 - 20:52 | 2537966 Spastica Rex
Spastica Rex's picture

Sequential!

Wed, 06/20/2012 - 03:11 | 2542244 Lore
Lore's picture

Last time, Ag got frontrun-slammed for -$60/oz. Maybe this time will be different?  Bwaahahahahahaaa...

Mon, 06/18/2012 - 19:33 | 2537774 JustObserving
JustObserving's picture

With US debt increasing at $1.5 trillion a year and unfunded liabilities increasing at $6.7 trillion a year, the Fed needs the flow of $50 to $75 billion a month to keep interest rates near zero.

Jon Hilsenrath, voice of the Fed at the WSJ,  just reported concerns of the Fed that credit is not reaching enough Americans - this will be the motive to ease more apparently:

The debate is especially important now. Fed officials are weighing new steps at their policy meetings Tuesday and Wednesday, following a period of disappointing jobs growth and financial turbulence in Europe.

The credit divide factors into their thinking. Fed officials have been frustrated in the past year that low interest rate policies haven't reached enough Americans to spur stronger growth, the way economics textbooks say low rates should. 

http://online.wsj.com/article/SB10001424052702303505504577403970826823032.html?mod=googlenews_wsj

 

Mon, 06/18/2012 - 19:47 | 2537832 nmewn
nmewn's picture

"Fed officials have been frustrated in the past year that low interest rate policies haven't reached enough Americans to spur stronger growth, the way economics textbooks say low rates should."

The meaning of the old saying...putting the cart before the horse...has always escaped our most learned monetarist thinkers.

Mon, 06/18/2012 - 21:19 | 2538024 Offthebeach
Offthebeach's picture

Muppets can't make the interest only payments they have been blessed( Peace Be Upon The Bernanke ) with now. They are supposed to pile more debts on their Slurpee Big Gulp shoulders? The Muppets fatty cankles are already flat on the floor, their flabby knees and thunder thighs are slapping like a big block that's thrown a rod at 80 . This isn't Depression era America. We're couch people. From Welfare To Shining Section 8 People. The old folks might of built the Empire State and Chrysler buildings, but we are Nanny Bloomberg people. Heck, we even got a metrosex Prefident now.

Mon, 06/18/2012 - 21:33 | 2538055 nmewn
nmewn's picture

Couldn't have said it better myself...I mean really, when Georgetown law students dolling out 50k a year (to endlessly study the intracies of passing new laws) can't afford a measly ten bucks a month for birth control pills, you know the end is nigh for our society.

And rubbers are even cheaper ;-)

Mon, 06/18/2012 - 19:23 | 2537776 I am Jobe
I am Jobe's picture

Congress officially declared 'dumber' than years prior because politicians are speaking down to constituents

http://www.dailymail.co.uk/news/article-2160881/Congress-officially-decl...

Mon, 06/18/2012 - 19:24 | 2537780 I am Jobe
I am Jobe's picture

Some jucy shit in the emails. is this guy fucking stupid or what?

 

Obama pick for Iraq ambassador withdraws after racy emails

http://cryptome.org/2012/06/mcgurk-chon/mcgurk-chon.htm

Mon, 06/18/2012 - 19:24 | 2537783 cherry picker
cherry picker's picture

I was against GW Bush's policies, but he said one thing that stands out in my mind as his face was white as a ghost when he said it, "Depression greater than the Great Depression".

It is just taking a while to unwind, but I do not think their fixes are working for the long term.

Mon, 06/18/2012 - 19:26 | 2537788 I am Jobe
I am Jobe's picture

Fixes all the way to the Grave

Mon, 06/18/2012 - 22:38 | 2538258 buckethead
buckethead's picture

"This sucker's goin' down"! ~ GWB

Mon, 06/18/2012 - 19:25 | 2537785 I am Jobe
I am Jobe's picture

China Home Prices Fall in More Than Half Cities Tracked

http://www.bloomberg.com/news/2012-06-18/china-home-prices-fall-in-more-...

Mon, 06/18/2012 - 19:25 | 2537786 The Gooch
The Gooch's picture

Hustle 'n' Flow. Just like her cycle.

Mon, 06/18/2012 - 19:28 | 2537793 Hohum
Hohum's picture

Flow is important, not stock.  Just like oil production!

Mon, 06/18/2012 - 19:32 | 2537794 Element
Element's picture

 

 

"However, it is also possible that the program would be specified as a "flow" of purchases of perhaps $50bn-$75bn per month." ... as it means the Fed will not stop printing ever again. Period.

--

Buyer and seller ... shark ... must keep swimming ... water over gill-slits ... or dead shark.

Mon, 06/18/2012 - 19:31 | 2537800 cdude
cdude's picture

"..We believe criterion 1 has been met. As shown in Exhibit 1, we expect the committee to lower its forecast for real GDP growth and raise its forecast for the unemployment rate significantly in the Summary of Economic Projections...

Hold on a minute; didn't the most recent Fed Beige Book report find the "recovery" to be progressing just fine? You got some splainin' to do- Benny.

Mon, 06/18/2012 - 19:35 | 2537812 Element
Element's picture

No, remember, in 2010 the FED said one of its four primary 'tools' to obtain targets is, "Communications".

 i.e. Baffling them with bullshit.

 

Tools bitchez!

Mon, 06/18/2012 - 19:44 | 2537824 cdude
cdude's picture

So then, what does the adage: "don't fight the Fed" refer to NOW? What it is the Fed is doing or what  they are saying? Damn, the rules keep changing.

Mon, 06/18/2012 - 20:04 | 2537863 nmewn
nmewn's picture

The paradigm of "don't fight the Fed" shifts when there are too many riding in the cart. Then the horse drops dead from fiat indigestion, blood loss from constant flogging...and dragging the actual weight of the load.

Its a metaphor...lol.

They will print more debt on you, its as sure as the sun rising in the morning...all the way to the bitter end...its all they can do to put off the civil unrest that eventually always follows this stupidity.

But don't worry about them, they believe they'll be just fine and can insulate themselves from the world ;-)

Mon, 06/18/2012 - 20:10 | 2537881 CPL
CPL's picture

Why would they have "rules"?  What rulez?  There are none other than don't get caught...even then you can bend "the rulez".

 

There are no rulez.

Mon, 06/18/2012 - 19:32 | 2537802 tradewithdave
tradewithdave's picture

Been looking' for a signal for three weeks. Sounds bearish for gold. Thanks for the tip "laptop found missing" Lloyd.

Www.tradewithdave.com

Mon, 06/18/2012 - 19:33 | 2537803 riley martini
riley martini's picture

 FRN backed by the full faith and credit of the people of the USA. The people should own the Federal Reserve as voting share holders . Profits would be paid to shareholders not to banks to cover up fraud and pay for bribes and bonuses . If the people of the USA were voting shareholders I'm sure they would not vote to buy fraudlent mortgages or MBS to cover the effects of the fraud committed by the banks .

Mon, 06/18/2012 - 19:33 | 2537804 dcb
dcb's picture

Didn't read the whole thing, but I realized a long time ago the fed would never stop monetizing. ever.

they could stop or monetize but put in riules that make capitial flows to assets expensive but the the real economy not. that would have given us a real recovery.

Look, you can argue with me all you want, but you are wrong. if one believees the majority of macro economic modles are flawed, why should we believe the the thought on deflation are any better. deflation is good andshould be embraced. it preserves purchasing power of the majority, it punished those who are over leveraged or paid too mcuh fior assets. deflation cures the ills of capitialist excess. It's good.

the only reason japan has managed to sustain it's standard of living is deflation. who cares if gdp grows and all the growth goes to the top 1%. it's stupid.

the lesson of the great depression wasn't anti deflation, it was against backing bank deposits. you can have deflation if bank deposits are backed. then purchasing power is maintained by teh majority.

same way ecb could have deposit insurance.. to pring to replace cash lost in deposits isn't inflationary it's just printing for money in the system. But if any bank uses it, the bond and equity holders must be wiped out. Net deflation, destruction of leverafe, and bad bets of capitialist economy, system then functions as it should, plus because bond holders and equity holders wiped out, system does better job in future with investment choices. the answer is so simple, but since it hurts the top 1% THE MOST IT WILL NEVER HAPPEN.  

Mon, 06/18/2012 - 19:34 | 2537807 GreatUncle
GreatUncle's picture

QE is only ever a quick fix and no central banker is considering the consequences except their own position.

As a thought I play hangman all the time now, the one with pen and paper "do have a thought to why it may have been created".

You can see it, somebody in a similar position came up with a game to express frustration about a dire situation.

So c'mon you all, lets play "hang the banker"  :-)

Seven letter word _ _ _ _ _ _ _

Okies you start with AEIOU normally

So after two goes of E & I we geth _ _ I E _ E _

You ain't got to be smart to finish it off but okies first letter is T.

Hey you won HANG THE BANKER congratulations.

Mon, 06/18/2012 - 19:43 | 2537808 Nid
Nid's picture

So, "to be clear", the Equity markets gained due to the "recovery" which Goldman saw as a reason for postponement of additional QE; the recovery has not materialized, which Goldman views as the catalyst for new QE, which Goldman believes will be ineffective; US Equities rally to within 5% of yearly highs and within 10% of all time highs.

That about right?

Mon, 06/18/2012 - 19:35 | 2537809 adr
adr's picture

This my  friends is why you don't give crack to a guy who knows where you live.

Sure if I woke up in the morning and there was $10k in my mailbox every day, I'd probably go out and buy a whole bunch of stuff I didn't need. (Actually I'd pay off all my debt and save the cash until I could afford to retire to somplace good, but I'm smart).

Eventually you get to the point that there's hell to pay if that money doesn't show up. Goldman is getting a gun from a pawn shop to knock off a Fed bank.

Mon, 06/18/2012 - 19:35 | 2537810 whisperin
whisperin's picture

I hope the vigilantes start selling the shit outta the 10yr. By George we can't let those (Euro) peons beat us to the finish line!!!

Mon, 06/18/2012 - 19:43 | 2537815 Winston Smith 2009
Winston Smith 2009's picture

"Easing" my ass.  More like "easing" something up my ass. 

Call it what it is, bailing out banks at my expense.  And it will not save the economy, so I will be paying twice.

Mon, 06/18/2012 - 19:48 | 2537838 I am Jobe
I am Jobe's picture

Vaseline will be provided.

Yours Truly

Vampire Squid

Mon, 06/18/2012 - 19:53 | 2537851 Wakanda
Wakanda's picture

Vaseline will NOT be provided.

Yours Truly

Vampire Squid

There, fixed it for ya'.

Mon, 06/18/2012 - 21:26 | 2538040 Offthebeach
Offthebeach's picture

Vasoline is only for closers!

Mon, 06/18/2012 - 19:40 | 2537818 Snakeeyes
Snakeeyes's picture

It will have little or no effect. Twist was a bust. M1 and M2 velocity are TERRIBLE! All those bank reserves are just languishing.

http://confoundedinterest.wordpress.com/2012/06/13/feds-operation-twist-what-did-it-accomplish/

Mon, 06/18/2012 - 19:41 | 2537820 kito
kito's picture

Implicit is that a big dollop of Large Scale Asset Purchases is imminent. come on tyler, you are buying into this crap? you write this as if its going to happen because goldman knows people? really? who dont they know? so we are supposed to now believe the giant squid--- like goldman wont sell into the pre qe rally knowing full well they are full of SHIT---only to buy back when its a massive disappointment???? come onnnnnnnnn...................

why would there be any lsap? so oil can fly back past 100 before electiions? so gold can break to 2000? come onnnnnnn...............

Mon, 06/18/2012 - 20:44 | 2537951 amadeusb4
amadeusb4's picture

Thank you. Bernanks is not going to flush his job and legacy down the toilet by pulling the rug out from under Obama only to have Romney come in and ax him for "printing money". Wasn't Romney already hostile to Bernankins on the campaign trail?

 

Mon, 06/18/2012 - 23:47 | 2538470 amadeusb4
amadeusb4's picture

Way to solidify the powers that be into your opponents camp, Mittens: http://www.reuters.com/article/2011/09/08/us-usa-campaign-bernanke-idUST...

Romney is his own worst enemy.

Mon, 06/18/2012 - 19:41 | 2537821 devo
devo's picture

No QE. Market is near 13,000. No chance. It would destroy the economy via gas prices.

Mon, 06/18/2012 - 20:35 | 2537938 you enjoy myself
you enjoy myself's picture

Brent is still just below $100, so yeah.  we'd hit $150 on another $900B in easing (annualized), god knows what happens when israel/iran/egypt/syria eventually tangle.  gas is still $4 on the west coast - Ben (and probably Obama) would rather see a controlled 200 points off the S&P than $6 a gallon heading into an election.   i mean, we were hovering near 1150 for months late last year and no one was acting like it was the end of the world.  but everyone was going apeshit when gas was over $4

Mon, 06/18/2012 - 19:44 | 2537826 Snakeeyes
Snakeeyes's picture

And I like my QE or Not QE better from June 9th.

http://confoundedinterest.wordpress.com/2012/06/09/the-feds-dilemma-to-qe-or-not-to-qe-that-is-the-question/

I will be debating Jared Bernstein, Biden's Chief Economist until recently, and Douglas Holz Eakins on The Fed and housing policy. Its at the National Press Club in DC on Thursday. I will post the debate if anyone is interested.

Mon, 06/18/2012 - 19:49 | 2537843 junkyardjack
junkyardjack's picture

So everyone should be shutting down their shorts and BTFD?  I guess Robotrader was right

Mon, 06/18/2012 - 20:36 | 2537941 skepticCarl
skepticCarl's picture

Net long equities, PM's, and commods is the way to play it now.  1. Sentiment is still quite bearish (a contrary indicator)   2.  Emerging markets are uptrending again  3.  Transports, Retail, Utilities, and some tech is relatively strong and 4. Fed remains accomodative in any number of ways, from ZIRP to Twist.   5. European recession is a negative, but pretty widely accepted, and probably discounted.

Mon, 06/18/2012 - 19:50 | 2537844 Debeachesand Je...
Debeachesand Jerseyshores's picture

Delightful,just when fuel prices are dropping across the country,the FED wants to have another of "money printing" that will raise prices on all commodities and shaft the American Taxpaper again.

Mon, 06/18/2012 - 19:50 | 2537846 Floodmaster
Floodmaster's picture

 

Britain's Trillion Pound Horror

 £4.8 trillion  -> 6:20

 ... Gold is cheap relative to just about anything else.

http://www.youtube.com/watch?v=7gd6-zfeeaM



 

Mon, 06/18/2012 - 19:52 | 2537848 Wakanda
Wakanda's picture

""However, it is also possible that the program would be specified as a "flow" of purchases of perhaps $50bn-$75bn per month.""

Go with the FLoW FiSHeS!

Mon, 06/18/2012 - 19:52 | 2537849 midgetrannyporn
midgetrannyporn's picture

The risk of inflation is remote, and even when it becomes less remote Fed officials should be easily able to tighten policy sufficiently.

 

Bullshit. Inflation is out of control and the fed has no intention of tightening ever.

Mon, 06/18/2012 - 19:53 | 2537852 caimen garou
caimen garou's picture

long cotton and ink

Mon, 06/18/2012 - 20:00 | 2537856 carefreemanjoe
carefreemanjoe's picture

Gold will be weak for days or weeks to come. Demand from India (largest importer) slowing down because of import tariff increases and currency weakness issues. Indian Government trying to discourage people from buying gold. Indian Finance Minister had a press briefing whre he opined that people should invest in equity instead. China is slowing down as well. As for Euro countries I suspect they are prone to start selling gold to shore up the economy as much as they can.

Mon, 06/18/2012 - 20:00 | 2537857 carefreemanjoe
carefreemanjoe's picture

Gold will be weak for days or weeks to come. Demand from India (largest importer) slowing down because of import tariff increases and currency weakness issues. Indian Government trying to discourage people from buying gold. Indian Finance Minister had a press briefing whre he opined that people should invest in equity instead. China is slowing down as well. As for Euro countries I suspect they are prone to start selling gold to shore up the economy as much as they can.

Mon, 06/18/2012 - 20:11 | 2537884 fonzannoon
fonzannoon's picture

The US is supposedly sitting on the largest physical gold reserves. If selling gold to shore up the economy was the solution then Why have we not sold ours to do the same since it is only "tradition"?

 

Mon, 06/18/2012 - 20:31 | 2537925 carefreemanjoe
carefreemanjoe's picture

Gold will be sold as a last resort. Seems counter intuitive but not impossible.

Mon, 06/18/2012 - 20:35 | 2537937 fonzannoon
fonzannoon's picture

The fact that Greece and Spain etc are at the last resort stage and is holding on says a lot about what gold is and why it may not go down even if they stop printing.

Mon, 06/18/2012 - 20:48 | 2537955 carefreemanjoe
carefreemanjoe's picture

On the same token Greece and Spain may not be buying Gold either. The Indian policy direction change on Gold is an indirect way to shore up their currency. Gold is the second largest import bill for India after oil. If the Reserve Bank of India steps in to shore up the currency, there is a possibility that they may lose and then the tide will move swiftly against them thereby enabling bucaneers like Soros to make their billion dollar windfall. Therefore by dampning the demand for Gold, the Indian Govt is serving a dual purpose. I think they will continue to increase the tariff on Gold if the recent increase does not have the desire impact. Less demand = lower prices. I do not expect Gold to go below $1200 because of the geopolitical overhang. These are just my analysis of the situation. I may end up being on the wrong side. Ignore the noise and make your own judgements and calculations.

Mon, 06/18/2012 - 20:55 | 2537971 fonzannoon
fonzannoon's picture

Yeah man what you are talking about I think about a lot. My guess is as they (India for instance) tax gold hard it just forces black markets to pop up everywhere.

I wonder if at some point the dollar is imploding and I needed something and had to sell some metals, would I sell them for the same currency I was trying to avoid? I don't have an answer to what will be going on when you get that far down the road.

Mon, 06/18/2012 - 20:52 | 2537956 carefreemanjoe
carefreemanjoe's picture

On the same token Greece and Spain may not be buying Gold either. The Indian policy direction change on Gold is an indirect way to shore up their currency. Gold is the second largest import bill for India after oil. If the Reserve Bank of India steps in to shore up the currency, there is a possibility that they may lose and then the tide will move swiftly against them thereby enabling bucaneers like Soros to make their billion dollar windfall. Therefore by dampning the demand for Gold, the Indian Govt is serving a dual purpose. I think they will continue to increase the tariff on Gold if the recent increase does not have the desire impact. Less demand = lower prices. I do not expect Gold to go below $1200 because of the geopolitical overhang. These are just my analysis of the situation. I may end up being on the wrong side. Ignore the noise and make your own judgements and calculations.

Mon, 06/18/2012 - 21:17 | 2538019 jimmyjames
jimmyjames's picture

Gold will be sold as a last resort.

***********

That sounds backwards to me-

Gold will be bought as a last resort-

Mon, 06/18/2012 - 21:34 | 2538056 carefreemanjoe
carefreemanjoe's picture

Imagine a well-to-do family which has fallen on bad times. I think the family will consider selling the family silver (and gold) to overcome hunger. Nothing is off the table.

Mon, 06/18/2012 - 21:49 | 2538098 jimmyjames
jimmyjames's picture

. I think the family will consider selling the family silver (and gold) to overcome hunger. Nothing is off the table.

*********

I wasn't really referring to the public-it was directed at government/central banks-but while were on this subject the fact is-people have no gold to sell-so don't expect much selling pressure from the public-

http://bit.ly/xPhPSI

Mon, 06/18/2012 - 22:00 | 2538134 nmewn
nmewn's picture

The well-to-do family will hire their well-to-do nephew lawyer for a slip & fall lawsuit and be back in the black in no time at all...silver (and gold) intact.

The poor stock boy working at the local grocery store won't be able to stand the strain and account for what aisle he was on, on June 18 21:59 and cave on the stand in front of a jury...settled...and dad throws his crutches in the courthouse bushes on the way out.

Nothing ever changes once they sink their hooks in...until its dust.

Mon, 06/18/2012 - 22:11 | 2538171 ekm
ekm's picture

No need to sell gold. US Military will go and get whatever needed.

Mon, 06/18/2012 - 20:12 | 2537888 TrillionDollarBoner
TrillionDollarBoner's picture

Possibly. But shortly after that gold will be strong for months or years to come.

Mon, 06/18/2012 - 21:16 | 2538013 mt paul
mt paul's picture

good

more gold for me to buy....

Mon, 06/18/2012 - 20:03 | 2537861 DavosSherman
DavosSherman's picture

"If When that happens, gold is going to $2000, $3000, hell, $10,000 $56,000-76,000 very soon, as it means the Fed will not stop printing ever again. Period.

Mon, 06/18/2012 - 20:18 | 2537867 Conman
Conman's picture

My feeling is no QE. It was much easier to talk up markets without doing anything. Ben seems to want to keep the threat on the back burner until Europe blows up. He seemed to make it clear that he wants congress to do something about the economy instead of relying on the Fed which can only inflate stock markets.

Mon, 06/18/2012 - 20:47 | 2537958 surfer433
surfer433's picture

Ben is in for a long wait if he thinks Congress is going to do something about the economy.  They could spend five trillion and have almost no effect.

 

Mon, 06/18/2012 - 20:07 | 2537870 ebworthen
ebworthen's picture

OT - Russia sending ships, marines, and Spetsnaz commandos to Syria, along with some Chinese military elements.

http://www.cbsnews.com/8301-202_162-57455015/russia-sending-navy-ships-t...

http://www.winnipegfreepress.com/world/report-russia-to-send-navy-ships-...

A defense analyst on Larry Kudlow said that Russia is also sending a sizable aircraft contingent as well and that it was an "alarming" development that is a "slap in the face" for the Obama administration and designed for Russia and China to defend their interests in the Middle East.

 

Mon, 06/18/2012 - 21:14 | 2538010 Ned Zeppelin
Ned Zeppelin's picture

I think we have no choice but to let the Syrians kill each other. 

Mon, 06/18/2012 - 20:08 | 2537874 chump666
chump666's picture

Goldman are truly losing the plot.  That is bad.  But the Fed has lost the plot.  There will be no QE3 asset buy-up from hell.  Obama who has more swing now, who actually holds Wall Streets balls (they will be bailed out again at some-point.)  Will not want oil bid over $100.  So, the Fed is stuck, it can't monetize directly into bonds, but it needs to juice the market.  Hence Op Twists continuation and a massive USD swap to the ECB (which is printing into European markets large).

Europe is capped now, US markets are next.  The market is losing faith in central banks, which is good and bad at the same time.

Mon, 06/18/2012 - 20:13 | 2537889 fonzannoon
fonzannoon's picture

The moment people even understand what a central bank actually is and what it does, and loses confidence in them...will be a very bad moment.

Mon, 06/18/2012 - 20:18 | 2537904 chump666
chump666's picture

yes and I would say around about now, starting with the ECB.

Mon, 06/18/2012 - 20:23 | 2537910 fonzannoon
fonzannoon's picture

This is a fuckin bizarro world. I deal with people everyday who have just become used to the idea of zero interest rates. Fuck make em negative it does not matter. As long as they have some defensive dividend paying stuff it's fine. Valuations shmaluations.

Mention central banks and their eyes glaze over. I may as well put on my tin foil hat at that point.

Mon, 06/18/2012 - 20:33 | 2537930 ekm
ekm's picture

Interesting exchange between two of my favorite ZH bloggers.

Mon, 06/18/2012 - 21:12 | 2538001 chump666
chump666's picture

Ok, look at the 10yr.  Not only are average people getting ripped with a cash-valueless return on rates.  So are Obama's paymasters = Asia.  UST are only liquid because Wall Street/banks can shift our of risk and into save havens very quicky with USTs.  But they are sh*t.  They pay nothing.  Goldman and others want the Fed to monetize more so they can juice up the risk trade again (stocks).

The relationship between the central banks and the major speculators (Wall Street/banks etc) is becoming too pronounced now.  Most people will join the dots.  Should sweat Obama some more.  Someone mentioned on here the oil price and the middle east.  So yeah, the oil price has to stay under 100.  The Fed will try and manipulate a oil/equity trading range pending meltdown in Europe and Asia.

 

Mon, 06/18/2012 - 21:38 | 2538065 fonzannoon
fonzannoon's picture

Hey Chump I agree with you. The average people however all own some bond fund that invests in treasuries and what they are losing in yield they are making up for in capital appreciation. At the end of the day your point is correct but as long as the blah blah blah core bond fund is up 5% year over year those people will not give a shit what central banks are doing until it's too late,

Mon, 06/18/2012 - 20:09 | 2537877 Nid
Nid's picture

The implication of all this bullshit (the Fed's determination to print) is that we're on the brink of something very bad, yet Equities are indicating something entirely different; nothing but complacency. The VIX closed below 19. Even at the lows of the recent "correction", the VIX couldn't crack 28. There literally is no fear in this market. How can that be?

Mon, 06/18/2012 - 20:16 | 2537895 chump666
chump666's picture

The VIX constantly closing lower is a worry.  Check VIX charts before major crashes, more so 1987, 2000, 2007 etc.  The last correction was just a correction.  Something big is brewing.

Mon, 06/18/2012 - 20:51 | 2537965 you enjoy myself
you enjoy myself's picture

There literally is no fear in this market. How can that be?

because Ben changed everything in 2009.  back then there was a risk that banks or other systematically important businesses could actually fail.  you had to do your research - now, not so much.  everytime we have a correction of 10% or so (often even less) Ben has implicitly guaranteed that he'll step in.  he doesn't even need to act directly - just give the ECB a gazillion dollars in swaps and let them do the buying on your behalf.

Mon, 06/18/2012 - 22:11 | 2538175 TonyCoitus
TonyCoitus's picture

Good point!

Mon, 06/18/2012 - 20:12 | 2537886 mt paul
mt paul's picture

monetary menstration ...

stop the flow..

long tampons with wings

Mon, 06/18/2012 - 20:12 | 2537887 HD
HD's picture

50bn-$75bn per month...

Essentially, a Spain sized "bailout" every two months until the end of time? Seems reasonable.

Mon, 06/18/2012 - 20:18 | 2537903 junkyardjack
junkyardjack's picture

Spain will bail itself out by buying US equities and riding the wave...

Mon, 06/18/2012 - 20:55 | 2537970 HD
HD's picture

Now that's central banker thinkin' we need more of!

Mon, 06/18/2012 - 20:13 | 2537891 q99x2
q99x2's picture

The central banks have to support Goldman because no one else will leave their money with them. Since the FED is Goldman I think the money has to come from Rockefeller/Rothschild now. Maybe it will maybe it won't.

Mon, 06/18/2012 - 20:16 | 2537894 bxy
bxy's picture

Aunt Flo is in town?

Mon, 06/18/2012 - 20:18 | 2537900 carefreemanjoe
carefreemanjoe's picture

Money printing by the Fed will have no positive impact on the economy. This is because the excess liquidity will be gobbled up by the too large to fail banks who will then use it to shore their balance sheets in case they have large losses on their derivate trades. The derivative gambling numbers will go up thereby increasing risk for the overall financial markets. Some of the gambling will spill over to stocks, oil and other commodoties helped by the positive spin from pretty Blondes on a TV channel. We had a shoddy unemployment number not too many days back and it is as if we are celebrating christmas. The market is being wired to teach people to play against their logic (bet down when the bet should infact be up and vice versa). This can only lead to a LARGE crash one day.

Mon, 06/18/2012 - 20:45 | 2537952 fonzannoon
fonzannoon's picture

I think you are correct overall except in thinking that the fed actually gives a shit about the economy.

 

Mon, 06/18/2012 - 21:12 | 2538000 Ned Zeppelin
Ned Zeppelin's picture

That's not true. The Fed cares very much about that aspect of the economy involving profits of its too-big-to-fail owners.

Mon, 06/18/2012 - 21:40 | 2538070 fonzannoon
fonzannoon's picture

I stand corrected.

Mon, 06/18/2012 - 20:18 | 2537901 carefreemanjoe
carefreemanjoe's picture

Money printing by the Fed will have no positive impact on the economy. This is because the excess liquidity will be gobbled up by the too large to fail banks who will then use it to shore their balance sheets in case they have large losses on their derivate trades. The derivative gambling numbers will go up thereby increasing risk for the overall financial markets. Some of the gambling will spill over to stocks, oil and other commodoties helped by the positive spin from pretty Blondes on a TV channel. We had a shoddy unemployment number not too many days back and it is as if we are celebrating christmas. The market is being wired to teach people to play against their logic (bet down when the bet should infact be up and vice versa). This can only lead to a LARGE crash one day.

Mon, 06/18/2012 - 20:22 | 2537908 asteroids
asteroids's picture

Please FED. Do NOTHING. Just wait.

Mon, 06/18/2012 - 21:10 | 2537996 carbonmutant
carbonmutant's picture

 Societe Generale expects a $600 billion QE3 from Fed this week...

http://www.marketwatch.com/story/socgen-expects-600-billion-qe3-from-fed...

 

Mon, 06/18/2012 - 20:31 | 2537917 ebworthen
ebworthen's picture

"Third, there may be more support among the public for MBS purchases because of the implied support for US homeowners as opposed to government deficits."

MBS's do nothing for homeowners, and only enrich the bankers and rehypothecators while defrauding taxpayers (Fannie/Freddie, etc.).

For this reason the FED will continue to buy MBS manure that it shovels onto current and future generations while providing the tenderloin and other choice cuts of the fatted calf to Wall Street.

Talk about "flow"...

Mon, 06/18/2012 - 21:38 | 2538063 jimmyjames
jimmyjames's picture

For this reason the FED will continue to buy MBS manure that it shovels onto current and future generations while providing the tenderloin and other choice cuts of the fatted calf to Wall Street.

Talk about "flow"...

*******

Yep-the insolvent bank de-leveraging process that we were told needed to happen-

In a normal world that would entail banks and shareholders taking writedowns- but as you explained the writedown is pushed into the public debt pool-

Mon, 06/18/2012 - 20:29 | 2537921 doggis
doggis's picture

what the F!!!!! what happened to taking the other side of the goldman prognostications??? 

it is eerily leading these answers...... i smell a rat du goldman!! 

NO QE ~ THE QE TRADE IS TOO CROWDED! IT IS AN ELECTION YEAR, IT IS TOO EXPECTED BY TOO MANY WHO FOLLOW THIS CRAP!

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