David Rosenberg With The $64,000 Question On The Political Fed's "NEW QE"

Tyler Durden's picture


The following brief paragraph from David Rosenberg should explain why any additional easing out of Bernanke at this point will be purely politically motivated, just as Rick Santelli explained yesterday. Furthermore, it demonstrates that, as has been patently obvious for years, the Fed is not only not an impartial institution but is actively in the business of perpetuating a broken political model (as a reminder, the Fiscal Cliff issue would be resolved yesterday if endless promises of more QE did not have the S&P at 2012 highs, but instead in the triple digits, as every Congressmen would have no choice but to immediately cut a comrpomise with their 201(k) plunging, and phones burning off the hook, and angry voters waiting to explain how they feel), which leaves the Fed will engaging in not only failed monetary policy but being a fiscal policy proxy as well (because lest we also forget, the 10 year near record lows is not exactly permissive to a prudent long-term debt issuance strategy).

It is rather amazing that a 2.8% yield on the long bond couldn't do the trick. By hook or by nook, it looks like the Fed is going to make an attempt to drive the rate down even further — but if that was the answer, wouldn't Switzerland, Japan and Germany be in major economic booms right now seeing as how low their 30-year bond yields are? Monetary policy in the U.S.A. is not the problem, so it is doubtful that it will be the solution. It all boils down to fiscal and regulatory policy and how the government can part the clouds of uncertainty — the Fed may be able at the margin to cushion the blow, but that's about it.

That is about it indeed. And will continue until the Fed finally does engage in more QE, the market rips then tumbles, and everyone finally has no choice but to acknowledge Bernanke's new clothes were never there to begin with.

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Fri, 08/24/2012 - 11:07 | 2733893 km4
km4's picture

Obama Is Pressuring EU To Prevent A Greek Euro Exit Until After The US Elections

Read more: http://www.businessinsider.com/white-house-eurozone-prevent-greek-euro-exit-us-elections-2012-8#ixzz24TbJrFRE

Fri, 08/24/2012 - 11:12 | 2733917 MillionDollarBonus_
MillionDollarBonus_'s picture

The 10 year note has to be the single best investment in history. Which other investment can boast a thirty year bull market, while providing an unprecedented safe-haven hedge against global market turmoil? The 10 year note has provided prudent investors with consistent alpha over the long term with the added benefits of frequently compounded cash flow and extremely low risk.


Fri, 08/24/2012 - 11:14 | 2733925 malikai
malikai's picture

Even better than your FB shares?

Fri, 08/24/2012 - 11:18 | 2733941 MillionDollarBonus_
MillionDollarBonus_'s picture

Robust investments always have large drawdowns. That is a fundamental principle of long term investing, and Facebook is no exception to that rule. FB already has a stellar reputation and impressive revenue. Once the management bring down costs and improve margins, Facebook is set to make a healthy profit. 

Fri, 08/24/2012 - 11:23 | 2733961 LoneStarHog
LoneStarHog's picture

May I suggest that you apply to become a contestant on America's Next Top Model, so that you can find gainful employment with a Wall Street firm?

Fri, 08/24/2012 - 13:55 | 2734491 CIABS
CIABS's picture

MillionDollarBonus_:  I was thinking the same thing about ten-year notes, and I bought a bunch of them thirty years ago.  But to my surprise the government gave me my principal back ten years later, and ever since then the investment hasn't done anything for me at all.  I was expecting a thirty-year bull market, and I'm really disappointed about what happened.

Fri, 08/24/2012 - 11:27 | 2733976 francis_sawyer
francis_sawyer's picture

Profit on what [revenue]?


Ad clicks generated from people logging in to see how many of their 622 BFF's just took a shit or gave generous facial recognition assistance to an alphabet soup agency?

Fri, 08/24/2012 - 11:28 | 2733980 alex_g
alex_g's picture

Love your work MDB, love your work...

Fri, 08/24/2012 - 11:31 | 2734000 Beam Me Up Scotty
Beam Me Up Scotty's picture

Which do you think will be greater than $Zero in 10 years, gold or Facebook?

Fri, 08/24/2012 - 13:27 | 2734375 jtz5
jtz5's picture

How is My Space doing these days?  FB will suffer the same fate, as soon as its replacement arrives.  Remember this...

MySpace, the once popular social networking site is suffering from big advertising losses due to a declining user base. The latest news is that they are paying off 500 people in a restructuring change.

Sadly, years later the decline in the userbase and advertising revenues mean that the business is going to have to lay off around 47% of the workforce in a restructuring plan. Yahoo has already made their intentions clear, but they aren’t offering any press briefings yet. MySpace Chief Executive Mike Jones said “The new organizational structure will enable us to move more nimbly, develop products more quickly and attain more flexibility on the financial side.”

Fri, 08/24/2012 - 13:49 | 2734462 holdbuysell
holdbuysell's picture

"Robust investments always have large drawdowns."

Now that's funny.

Fri, 08/24/2012 - 11:27 | 2733975 Dr. Engali
Dr. Engali's picture

I have a comic book that I paid .25c for that I can probably get around $17,000 for it today.

Fri, 08/24/2012 - 11:42 | 2734043 francis_sawyer
francis_sawyer's picture

No offense... But WTF do you want with a $17,000 comic book?... Monetize that bitch and buy some gold or silver... (and, of course, an outrigger for your canoe)...

Fri, 08/24/2012 - 12:10 | 2734142 GERxit
GERxit's picture

Looking back from today and talking about the left hand side of the chart you're right... was a good investment. But I doubt it will repeat this performance.

But the US is happy to take your million dollar bonus I guess... heard they need some money daily

Fri, 08/24/2012 - 13:07 | 2734302 sdmjake
sdmjake's picture

The 10 yr has done well. 30 yrs is good 'cherry picking' for a start time based on what was going on. [Then again, I could cherry pick the 40 year return on periodic element 79 and do even better.] Prudent investors need to evaluate the current landscape and determine what has best upside from here. However, I think the following is apropos for your prudent investor regarding the 10yr right now:

"The prudent see danger and take refuge, but the simple keep going and suffer for it"  Proverbs 27:12

Fri, 08/24/2012 - 11:22 | 2733958 reader2010
reader2010's picture

Buffett's insurancce business won't allow the Greek default to take place sine it sold tons of credit default insurance policies.

Fri, 08/24/2012 - 11:08 | 2733895 flacon
flacon's picture

Typo: "By hook or by nook" should read: "By hook or by CROOK"

Fri, 08/24/2012 - 11:08 | 2733896 km4
km4's picture

President Obama has nearly 19 million Twitter followers, but 70%, or approximately 13 million of them, are fake, according to a new analysis.


Fri, 08/24/2012 - 12:24 | 2734132 TWSceptic
TWSceptic's picture

Another study found the other 30% collect food stamps.


Are you surprised that Obama might have so many fake followers?

Not after I learned about the moral standards of the Obama Super PAC.

Fri, 08/24/2012 - 11:08 | 2733898 Cognitive Dissonance
Cognitive Dissonance's picture

Please don't try to use logic here. It just muddies the fiat waters.

Fri, 08/24/2012 - 11:08 | 2733899 Mugatu
Mugatu's picture

Someone remind me what the definition of an idiot is?

Fri, 08/24/2012 - 11:15 | 2733930 Dr. Engali
Dr. Engali's picture

Bernank, Obummer , Mittens, RobotTrader... Pick your choice they all fit.

Fri, 08/24/2012 - 11:13 | 2733902 malikai
malikai's picture

Mr. Bernanke: Get to work!

EDIT: I have to disagree with Rosenberg on his statement regarding monetary policy not being the problem. It is indeed part of the problem, as it is preventing the solution.

Fri, 08/24/2012 - 11:09 | 2733903 Robot Traders Mom
Robot Traders Mom's picture

Are we going to see the 2% Refi QE hit this wknd?

Fri, 08/24/2012 - 11:11 | 2733909 the 300000000th...
the 300000000th percent's picture

There doing QE 3 or maybe even 4 right now, under cover, wake up!

Fri, 08/24/2012 - 11:12 | 2733915 LoneStarHog
LoneStarHog's picture

$64,000 Question? ... Someone is really dating himself/herself or has not heard of inflation.

Fri, 08/24/2012 - 11:45 | 2734055 NotApplicable
NotApplicable's picture

I was noting that it wouldn't even constitute a rounding error these days.

Unless you're talking about an ER visit.

Fri, 08/24/2012 - 11:15 | 2733931 Jlmadyson
Jlmadyson's picture

Bullard says we can hold off though so all is good.

Right Chucky S?

Fri, 08/24/2012 - 11:38 | 2733933 Mercury
Mercury's picture

That is a good question.  How about this thought experiment:

The Fed should instead print money and "buy back" newly issued government.

Pick any group of dubious, make-work, counter-productive mandates, regulations, compliance red tape or barriers to entry the government has "issued" in the last ten years or so.  Let's chose say, The Office Of Rent-Seeking Bullshit and its 10,000 employees. Good luck closing that agency down -that never happens- but paying them to sit on their hands would likely produce a less worse outcome than paying them to do whatever it is they're supposed to be doing.


Sure there will still be the Office Of Rent-Seeking Bullshit and its 10,000 employees, that’s a sunk cost. But the newly printed money can buy back their future anti-productive activity by paying those employees their salaries to stay home and not make trouble.


This wouldn't be as effective as repealing the law that created the Office Of Rent-Seeking Bullshit or not having passed it in the first place but it's not materially different from issuing debt and then printing money to buy it back.  But it would be much more effective in terms of encouraging business activity.

Fri, 08/24/2012 - 11:55 | 2734084 NotApplicable
NotApplicable's picture

I see you share my approach to pragmatic government employment, where dead weight is used as ballast against the "useful idiots" who would otherwise make everything worse in their false belief that centralized coercion is the best way to mold society, if only they had more power to implement it properly (shudder the thought).

Luckily, over time, usually even the densest "servant" realizes it isn't working, then develops a healthier, apathetic outlook in order to survive it all intact. The ones that don't succumb to that though, they either seek to rise up through the ranks, go postal, or turn whistle-blower in an effort to make their reality better align with the facade they desperately cling to.

Fri, 08/24/2012 - 11:16 | 2733936 scatterbrains
scatterbrains's picture

If Romney (who is funded by the banks) puts the fed in the spotlight it's because the fed wants it there perhaps an excuse for why the fed wont ease. (We couldn't and risk being too political) The louder this issue becomes the more certain I am that the fed will not ease other than huffing and puffing.

Fri, 08/24/2012 - 11:18 | 2733939 buzzsaw99
buzzsaw99's picture

Monetary policy in the U.S.A. is not the problem...


Fri, 08/24/2012 - 11:47 | 2734058 NotApplicable
NotApplicable's picture


"They" don't understand money, therfore they've no policy about it. Can't blame something that doesn't exist, can we? ;-)

Fri, 08/24/2012 - 12:47 | 2734242 buzzsaw99
buzzsaw99's picture

monetary policy which favors parasitic bankers, debases the currency, encourages the twin deficits, foments asset bubbles, and guarantees the wealth of the uber-rich at the expense of everyone else is not the problem. hmm, interesting.

Fri, 08/24/2012 - 11:19 | 2733946 bobbydelgreco
bobbydelgreco's picture

qe a political tool what's the next zh scoop? the sun came up

Fri, 08/24/2012 - 14:35 | 2734690 TheFuture_MrGittes
TheFuture_MrGittes's picture

You are standing on an oblate sphere rotating in space, that rotation regularly brings the sun into view, which combined with a slight tilt in the axis of rotation causes the sun to appear to rise (and set), but this is an illusion. How's that for a revelation?


h/t Copernicus.

Fri, 08/24/2012 - 11:20 | 2733950 The Axe
The Axe's picture

Helicopter BEN..ready for LIFTOFF!!!!!!

Fri, 08/24/2012 - 11:30 | 2733990 AGuy
AGuy's picture

Bens is selling his Helicopters and purchasing C5 Galaxies and B52 Bombers... Ben plans to send money into the stratosphere!

Fri, 08/24/2012 - 11:24 | 2733960 Jlmadyson
Jlmadyson's picture

You know the best of all this Bernake defending QE stuff and whenever they talk about it;

They always throw in recovery.

Ahahaha! We're recovering so much that we need 3 doses of QE, ZIRP and unending twist.

It kills me every single time they plug that into the text/discussion.

Fri, 08/24/2012 - 11:31 | 2734002 LMAOLORI
LMAOLORI's picture




Government form of Doublspeak (propaganda) I had to laugh last night look at this title

U.S. Incomes Fell More In Recovery, Sentier Says

This is interesting


Bankster Reaction to a Return to the Gold Standard

Fri, 08/24/2012 - 12:40 | 2734223 Whoahthere
Whoahthere's picture

QE's never ended. We are really on QE 12 by now.

Fri, 08/24/2012 - 11:25 | 2733962 reader2010
reader2010's picture

By now it should have been crystal clear to everyone that QE is used as a wealth transfer vehicle for those insiders. It really deosn't mastter to the central bankers whether or not it helps general employment, or economy.

Fri, 08/24/2012 - 11:31 | 2733997 AGuy
AGuy's picture

Tip: _Million$Bonus is sarcasm.



Fri, 08/24/2012 - 11:25 | 2733967 Hedgetard55
Hedgetard55's picture

Rosie, is he a bull or a bear now?

Fri, 08/24/2012 - 11:26 | 2733968 Toolshed
Toolshed's picture

If indeed you were stupid enough to invest in Fadebook, then why would anyone be the least bit interested in ANYTHING you have to say? Oh.....I forgot, you are just another garden troll.

Facebook=MySpace=kiss your money goodbye

Fri, 08/24/2012 - 11:28 | 2733979 OutLookingIn
OutLookingIn's picture

Dave from Denver August 01, 2012

"It won't make a difference which political party gets the white house or control of congress in the next election. It just doesn't matter any more and if you think it does, then you are sadly ignorant of the facts, hopelessly naive, or tragically stupid."

Just wondering which catagory MDB falls under? Hmmm...

Fri, 08/24/2012 - 11:29 | 2733982 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Wait a second ... why do we have a FED ?

Oh, they are a-political.  They are a bank. We are a free market society.The government should not control markets and the money supply for its own political (read corruptible) ends.

Yeah, but if they are a-political and a bank, how is it that they can monetize the government's debt?

Isn't that strongly political? They print money out of thin air, to buy the government's debt.

The government's unfundable debt which the FED is monetizing, is going to pay off special interests.

One is the military industrial complex.

Two is the vast populace who is out of work, or never had work, or is just scraping by.

Three is everyone else who can actually benefit from inflating asset prices.

Fri, 08/24/2012 - 15:03 | 2734841 mick_richfield
mick_richfield's picture

We have a Fed because the American Republic was conquered about 100 years ago by some people who had been trying to do it for quite a while. 

The victors installed their government here, but allowed the Republic to retain its former institutions as an aid to their gradual conversion of American society to a form more amenable to their long term aims.

Fri, 08/24/2012 - 11:30 | 2733992 the 300000000th...
the 300000000th percent's picture

My question is, IF we can get audit the fed come to reality, then won't they just give us fake papers and fake figures?

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