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Stephen Roach Smokes Crack-Addicted Market "QE3 Is Not Going To Work"

Tyler Durden's picture




 

Is it any wonder that Stephen Roach is now ex-Morgan Stanley? Today's brilliant truthiness in his interview on Bloomberg TV is an absolute must-watch as the veteran market practitioner notes that the Fed is forced to act next week and while consumers are telling you that they want to pay down debt - which all the monetray stimulus in the world is not going to change - that QE is nothing but crack to a ridiculously addicted market. With 70% of the US economy in a balance sheet recession, the Fed knows this (which he notes is now run by WSJ's Jon Hilsenrath since what he prints must be adhered to by Ben for fear of market disappointment) and is "dangling QE in front of the markets like raw meat - but it has not worked and it will not work!" But critically, he believes, the euphoric response of markets will be tempered since they have become "used to the fact that all of this unconventional monetary easing by the central bank is just not what it is supposed to be."

 

Roach on whether more Fed stimulus is a good idea:

The Fed is flailing and has been flailing for the better part of the last three years. We had QE1, which worked, and that’s it.  We’ve had QE2, Twist 1, Twist 2 and now maybe QE3.  The economy is in the doldrums. The biggest piece of the economy is the American consumer. 70% is in a balance sheet recession…The Fed knows this, but they are dangling this raw meat in front of the markets and the markets are salivating as they always do in that frenetic way that they try to believe in the Fed. But it has not worked and it will not work. “

On how likely it is that the Fed will issue more stimulus:

“Absolutely. They have no choice. They have gone about their usual pre-FOMC leak frenzy where they talk to this reporter and that reporter. Jon Hilsenrath is actually the chairman of the Fed. When he writes something in the Wall Street Journal, Bernanke has no choice but to deliver on what he wrote.”

On whether the Fed will move on stimulus next week:

“Absolutely. They will not disappoint the markets. The markets are now setting themselves up and discounting the next QE2. The Fed has just woken up to ‘oh my gosh, the economy is weak again.’ Well hello! The economy has been weak for the consumer for 18 quarters. The growth rate of consumption over the last four and a half years has averaged below 1%. 70% of the economy growing below 1% and the Fed is just figuring this out? Come on.”

 

“The point is, when they plant a story in the Wall Street Journal, and this story has been planted. Jon Hilsenrath is the weed that grows…the guy has a perfect track record…They’ll do some type of QE3. Twist 2 was a huge disappointment. It was a feeble flailing at the windmill and the economy is a lot weaker than when they reached the Twist 2 decision. They’ll have to do another round of quantitative easing. I don’t know exactly what securities will be involved. You could speculate it could be mortgage-backeds to try to help the housing market. There is some criticism they have been too focused on Treasuries. We’ll have to wait and see, but I think it will definitely be another round of quantitative easing as opposed to the twisting again like we did last summer.”

On whether QE3 will work:

“No, it’s crack! That’s what it is. It’s not going to work. QE1 worked because it was in the midst of wrenching crisis. QE2 failed, despite what the Fed’s research shows. Twist 1 has failed. Twist 2 is failing. When 70% of the economy is in a balance sheet recession and the growth rate for 18 quarters in row has been at less than 1% at an average annual rate, consumers are telling you something. They want to pay down debt and rebuild saving and all of the monetary stimulus in the world is not going to change what is a perfectly rational response. So the idea that the Fed is going to step in and save the day, it has not worked in the past except during the depths of the crisis and i give them credit for that. And it will not work in the future. Don’t believe the Fed PR that they put out while we have research that shows that it worked. Of course they do.”

On whether he expects futures to be higher than they are right now:

“The markets have responded positively to the leaks that came out late yesterday afternoon, but the response is small. I think the markets have gotten used to the fact that all of this unconventional monetary easing by the central bank is just not what it is supposed to be. In terms of delivering an actionable vigorous response in the real economy.”

 

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Wed, 07/25/2012 - 12:00 | 2649605 JohnKing
JohnKing's picture

QE3 will work.

 

But only for THEM.

Wed, 07/25/2012 - 12:07 | 2649637 TruthInSunshine
TruthInSunshine's picture

QE3, 4, 5, 6, 7, 8.....through XXXXXXXXXVII will work, because if interest rates drop another 25 to 75 basis points, this will spawn an absolute feeding frenzy of consumption and investement

Sincerely,

 

Ben 'Banker's Bag Man' Bernanke

 

 

cc:  Dr. Paul Krugman, Ph.D, Nobel Laureate and CEO of Hostile Alien Invasion Financial Group, PLLC

Wed, 07/25/2012 - 12:11 | 2649644 Pladizow
Pladizow's picture

The Fed: Chasing that first High!

Ben's got his spoon, needle, tourniquet and ever larger quantities of hopium ready!

Wed, 07/25/2012 - 12:17 | 2649686 tip e. canoe
tip e. canoe's picture

A Knife, A fork, A bottle and a cork.. 
THAT’S THE WAY WE SPELL NEW YORK!!

http://www.youtube.com/watch?v=YG5Sy0R9jAc

Wed, 07/25/2012 - 12:54 | 2649833 Alea Iactaest
Alea Iactaest's picture

QE3 will work b/c the Fed is "now run by WSJ's Jon Hilsenrath" and Hilsenrath is run by GS (and doing god's work).

Wed, 07/25/2012 - 15:17 | 2650387 fockewulf190
fockewulf190's picture

Time to break out some powder and load the boat with some more Phyzz.

Wed, 07/25/2012 - 23:34 | 2651963 StychoKiller
Wed, 07/25/2012 - 12:22 | 2649718 poor fella
poor fella's picture

I hear overdose is a bitch...

Wed, 07/25/2012 - 23:47 | 2651999 cynicalskeptic
cynicalskeptic's picture

Poor junkies can't AFFORD to OD - rrely happens unles they hit the LOTTO or a new dealer unexpectedly improves the quality trying to drum up business - catching the old users unawares.

It's the rich celebs that OD big time - they can afford way more than their bodies can tolerate.

 

The parallel here is that the average consumre can't AFFOrD to SPEND.  They're broke and unemployed - already overloaded with debt.   Meanwhile the really wealthy are loading up on Monets and 400oz gold bars - read the article on Swiss Free Port storage in the NYT - things which really don't do much to stimulate the economy.   After all you can only own so many Bentleys.......

Wed, 07/25/2012 - 12:57 | 2649849 Hugh_Jorgan
Hugh_Jorgan's picture

I agree they will QE ad infinitum; in the the power-addled mind of The Bernank he has no other choice, However, the "feeding frenzy" will never be seen by you and I. The "real" unemployment rate is ~23%, that is great depression territory, no one at the top is going to be handing out cheaper money to the unwashed masses. This is just more bend, extend and pretend antics. The economy is in dire straights.

Wed, 07/25/2012 - 12:13 | 2649658 Daily Bail
Daily Bail's picture

PERP WALK - Former CEO & Chairman Of Anglo Irish Bank Arrested For Fraud

The Irish bankster perp walk begins precisely at the 1:18 mark.  It's about time this punk faced a jury of his peers.

 

Wed, 07/25/2012 - 12:27 | 2649738 runlevel
runlevel's picture

1 down, thousands to go.

Wed, 07/25/2012 - 12:30 | 2649752 Vuke
Vuke's picture

Hmmm. Civilized "perp" walk.  No handcuffs, no burly cops and no guns.  Maybe something to adopt.

Wed, 07/25/2012 - 12:53 | 2649831 Sabibaby
Sabibaby's picture

I don't think facing his peers will do enough justice. Lets make him walk among the people :)

Wed, 07/25/2012 - 12:11 | 2649663 The Monkey
The Monkey's picture

It might work, if the intention is to reduce the demand (and price) of portfolio insurance in an environment frought with event risk.

The Fed is stuck with the regime they have created, guarantees for the greater fool.

Wed, 07/25/2012 - 12:54 | 2649832 yrad
yrad's picture

"Come on, Doc. Just one more shot of Corzine"

Wed, 07/25/2012 - 23:49 | 2652004 cynicalskeptic
cynicalskeptic's picture

uh... THAT'S bad stuff - it's cut with really strong laxatives.... leaves you feeling really empty and hungry - and shit all over the place

Wed, 07/25/2012 - 15:33 | 2650468 Clayton Bigsby
Clayton Bigsby's picture

I sure wish Betty Liu would shut the fuck up once in a while

Thu, 07/26/2012 - 00:28 | 2652077 mick68
mick68's picture

Stupid twit interviewer is only interested in whether QE3 will happen or not. Perfect example of the salivating dogs waiting for their bone. What are those dogs going to do when QE3 fails or even kicks off hyperinflation?

This is so ugly to watch, everyone turned into saucer eyed money lovers, like watching a zombie movie.

Wed, 07/25/2012 - 12:01 | 2649609 Zola
Zola's picture

I'm tired of these old men who have bought hook line and sinker into the scheme, made tons of $$$ , and then retire and feel like they can criticize the whole thing from a safe distance after having benefitted nicely from it all. Hypocrits.

Wed, 07/25/2012 - 12:04 | 2649629 Conman
Conman's picture

Would you rather they come on tv and say the opposite? Old age = closer to death = need to attone.

Wed, 07/25/2012 - 12:06 | 2649636 francis_sawyer
francis_sawyer's picture

Took the words right off of my keyboard...

Wed, 07/25/2012 - 12:33 | 2649767 iDealMeat
iDealMeat's picture

"You didn't write that."

 

Wed, 07/25/2012 - 12:29 | 2649749 Shizzmoney
Shizzmoney's picture

I see a difference between the two commetns, but agree, in part, with both Zola and Conman's assertions.

Roach is really putting his heart of his sleeve.  Did he profit off of the corrupt system? Absolutely.  But he's old school in the sense I am sure he remembers what happen during the Civil Rights era.  The violence, rioting, and the evils protecting by governments in the streets when malace was ignored (like it is here). 

He knows, from investment experience, what the fuck is going on.  Biderman laid out the technicals on what QE Twists have done for the market (growth, which declines each time, followed by a market sell off).  The Hilsenrath comments really are "risque" in the sense here we have a former exec of a corporate establishment fund saying, basically, the Fed is taking part in planting propaganda to appease the market, and to bandaid fraudulent debt with paper printing. 

That's the type of stuff you used to hear spulated on here or Alex Jones.  Now its on Bloomberg.  It's refreshing, IMO (also b/c I think it is right!).

Weill's comments?  Now THAT is a classic case of "Greg Smith's Dilemma".  Plus, I think him, along with the other banking establishment and Neo Liberal Government heads....know what's about to happen.  Social upheaval, political unrest, and a market crash that's coming which will make the 2011 London Riots look like a Phish Concert.  So, come out with some populist political rhetoric, and act "contrite" as you step out of your limo to tell the masses what they want to hear. 

Weill's comments are Optimism Porn.  If he really meant them, he would of thought that back in 1999.

Nothing will change, though.....until the People are finally back in charge.

 

Wed, 07/25/2012 - 13:01 | 2649864 cougar_w
cougar_w's picture

When I see rich bankers and financial wizards getting in front of the media and doing teary-eyed mea culpas, I have to imagine they are writing themselves a handy "Get Out of Noose Free" card. That's all they want to do, avoid a hanging.

Wed, 07/25/2012 - 13:55 | 2650034 Doubleguns
Doubleguns's picture

guillotine then. They must pay. 

Wed, 07/25/2012 - 23:53 | 2652016 cynicalskeptic
cynicalskeptic's picture

Hard for 'the people' to get back in charge when TPTB have armies and tanks - and have no restrictions on using them against their own populations. Ask Syrians.   (LIbyans got rid of Ghaddaffi only because outside forces also wanted him gone... look at who's pumping Libya's oil now - and ask what happened to their gold)

Wed, 07/25/2012 - 12:39 | 2649786 5880
5880's picture

Or,

things changed

Wed, 07/25/2012 - 13:24 | 2649944 JohnKozac
JohnKozac's picture

Betty Bloomberg is pissed that Roach speaketh the truth (as he belives it) when he does not give his host (Bloomy) credit for their (missed) predictions.

 

Roach is pretty good imo. More honest then most...esp his tongue-in-cheek, "Hilsenrath is head of the Fed." comments....

Wed, 07/25/2012 - 12:01 | 2649612 Concentrated po...
Concentrated power has always been the enemy of liberty.'s picture

Crack smoking, Bitches!

Wed, 07/25/2012 - 12:15 | 2649678 Jlmadyson
Jlmadyson's picture

Puff, puff, pass.

Wed, 07/25/2012 - 12:03 | 2649617 Shizzmoney
Shizzmoney's picture

File the latest hit piece on Barosky's "Bailout" by the NYT under: "NeoLiberal Fantasy Land Stories"

As ugly and flawed as the rescue process was, and as galling as Wall Street’s revived bravado and bonuses can be to most Americans, the fact remains that an economic collapse was averted, and that Main Street is recovering: slowly, but typically so for recessions brought on by credit crises. As Europe’s crisis persists for a fourth year, commentators around the globe have suggested that the Continent should have followed America’s example.

Read more at http://www.nakedcapitalism.com/2012/07/nyts-jackie-calmes-grossly-inaccurate-hit-piece-on-neil-barofsky.html#YeAvpZ3P4cjjrowX.99

Wed, 07/25/2012 - 12:18 | 2649696 Pareto
Pareto's picture

Thats' bunk.  that's exactly the kind of thinking that has made things worse, not better.  I love these Keysian arguments, of "oh my god the world is going to end, banks are too big too fail, we have to stimulate and rescue the market", and yet $15 T later, the market continues to demonstrate, UNEQUIVOCALLY, that prices will and must inevitably fall.  there is No Free Lunch.  No amount of stimulus, twist, QE3, is going to change the fact that relaitive to their productivity, most assets are over priced precisely and because of the stimulus being hurled at it.  If it was that easy, if all we had to do was print money, or create government sponsored stimulus (which as you know diminishes the solvency of the balance sheet), wouldn't that be a permanent line item on the government's income statement?  Let prices fall and let them fall fast so that the market can price resources efficiently - paid for and put to their highest use value.  Only this will lead to capital formation that is real, and therefore, sustainable.

Wed, 07/25/2012 - 12:05 | 2649634 partimer1
partimer1's picture

who says the market is economy?  who says the Fed is for economy?  

Wed, 07/25/2012 - 12:06 | 2649635 semperfi
semperfi's picture

Roach is WRONG!   It will work.  Because its sole purpose is to MONETIZE THE DEBT.  Gee, that was easy.

Wed, 07/25/2012 - 23:55 | 2652020 cynicalskeptic
cynicalskeptic's picture

Morgan Stanley is still in existence and he has a job... talk about biting hands that feed..........   if free markets worked Morgan Srtanley would be on the corporate dung heap - completely out of business - not regularly merged and rescued.   

Wed, 07/25/2012 - 12:07 | 2649638 buzzsaw99
buzzsaw99's picture

the fed is a looting operation plain and simple.

Wed, 07/25/2012 - 12:08 | 2649645 kalasend
kalasend's picture

Isn't Roach a semi-perma-bull before when he was with MS?

Wed, 07/25/2012 - 12:56 | 2649842 Jacque Itch
Jacque Itch's picture

Nope.  Been reading him for 10 years.  Solid, except he believes in China a bit too much.

Wed, 07/25/2012 - 19:07 | 2649989 Blankenstein
Blankenstein's picture

Not sure about his overall economic view, but Roach was one of the few economists that spoke out that the housing market was unsustainable early on ~ 2003.  

Wed, 07/25/2012 - 12:08 | 2649646 Quinvarius
Quinvarius's picture

QE2 wasn't big enough.  That is why it failed.  I knew the moment it was announced it wasn't big enough.  I don't mean not big enough to juice the market either.  I mean not big enough to make dent in the Fkd up balance sheets it was supposed to assist.  If you are going to monetize the debt, you need to monetize the right kind of debt in the right amounts.

Wed, 07/25/2012 - 13:03 | 2649875 cougar_w
cougar_w's picture

They will need at least $2T this time.

Whatever the amount is half will go straight to Europe, by the quickest means.

Wed, 07/25/2012 - 12:08 | 2649647 eclectic syncretist
eclectic syncretist's picture

It's a good day to be in possession of gold and silver.  After all, what does QE benefit more, equities or gold/silver?  Oh yeah, gold and silver by a looooooooottttt.

Over the past five years equities are flat, while gold and silver are each up over 100% thanks to uncle ben and the debtsters.

Wed, 07/25/2012 - 12:09 | 2649652 marz929
marz929's picture

WHERE IS JON CORZINE?

Wed, 07/25/2012 - 12:19 | 2649703 saturn
saturn's picture

Keeping low profile in hope he will be forgotten.

Wed, 07/25/2012 - 13:36 | 2649983 GOLDTEETHSILVER...
GOLDTEETHSILVERFILLINGS's picture

Slithering around in the pit...

Wed, 07/25/2012 - 12:10 | 2649654 Dr. Engali
Dr. Engali's picture

Good Lord listen to her get all defensive because Roach said Hilsenbarf is the fed's bitch.........No he is not we are the fed's bitch!

 

Wed, 07/25/2012 - 12:52 | 2649828 Hype Alert
Hype Alert's picture

Seriously, it was like a cat fight over who was the better bitch.  Bloomberg mentality, lol.

Wed, 07/25/2012 - 12:10 | 2649655 DosZap
DosZap's picture

To whoever signed Baracks B Day card thank you!!!!!!!!.

I was going to switch websites, after 45 minutes of that smug puss,I was thinking suicidial thoughts.

Wed, 07/25/2012 - 12:17 | 2649691 CunnyFunt
CunnyFunt's picture

The cult of Obama is sickening. WTF does his campaign think he will gain on ZH?

Wed, 07/25/2012 - 12:10 | 2649656 NEOSERF
NEOSERF's picture

My skin is already crawling and I am just itching for another hit on the QE glass pipe...bring it on so we can all congratulate eachother for what will look like a great retailing Christmas...Hellalujah...

Wed, 07/25/2012 - 12:11 | 2649659 Jlmadyson
Jlmadyson's picture

No it's crack! It's not going to work!

sogood.gif

Wed, 07/25/2012 - 12:12 | 2649668 RobotTrader
RobotTrader's picture

It is not going to be QE.  QE will make the bond market go even more parabolic.

 

It is going to be some other scheme or scam none of us have heard of yet.

Cannot underestimate the power of TPTB to dream up some other program which will catch the bears offsides again and start another Doug Noland "Rip Your Face Off" rally.

Wed, 07/25/2012 - 12:18 | 2649695 Conman
Conman's picture

Maybe they should buy muni bonds of the californian variety?

Wed, 07/25/2012 - 12:28 | 2649742 Hype Alert
Hype Alert's picture

Sadly, that is probably true, but it will do nothing but reinforce beliefs the market is a rigged casino.  HFTs will profit wildly and investors will be run further from the market.  Short term gains that poison the well.

Wed, 07/25/2012 - 12:33 | 2649765 mendigo
mendigo's picture

I agree they've got to keep it fresh.
More MBS maybe?
Its not about how QE will improve anything - its about what will happen if they don't QE. Iits baked-in.

Wed, 07/25/2012 - 12:44 | 2649805 Richard Head
Richard Head's picture

How's that CMG working out for you, assclown? And NFLX?

Wed, 07/25/2012 - 13:09 | 2649897 SheepDog-One
SheepDog-One's picture

How's yer 'IBEX firm bottom here goin all-in' call workin out for ya fuktard?

Wed, 07/25/2012 - 13:37 | 2649986 TWSceptic
TWSceptic's picture

You understand that the name doesn't matter right? That it all comes down to money printing RIGHT?

Wed, 07/25/2012 - 12:16 | 2649685 Dr. Engali
Dr. Engali's picture

Gold Bitchez!

On to step 4

Wed, 07/25/2012 - 12:17 | 2649687 Lohn Jocke
Lohn Jocke's picture

These Libertarian nutjobs are WRONG! Interest rates are as low as they've every been, and look at the terrible state of the European economies forced into austerity measures! Adam Smith... WHY...WONT...YOU...DIE...

These Keynesians can take their rhetoric to the grave.

Wed, 07/25/2012 - 12:19 | 2649702 firstdivision
firstdivision's picture

We had QE1, which worked

If it worked, we wouldn't have needed QE2, Twist1&2, QE3, QE4, QE5, QEct, QEct...

Wed, 07/25/2012 - 12:19 | 2649704 Bam_Man
Bam_Man's picture

I can barely stand watching that bitch Betty Liu. Five seconds is my limit. Hard to believe, but she is even worse than the bimbos on CNBC.

Wed, 07/25/2012 - 12:20 | 2649708 Jlmadyson
Jlmadyson's picture

Oh yea and love that Jon Hilsenrath is now running the Federal Reserve.

Can it get anymore epic?

Bow Bernake. This is the system you have created.

Eightball anyone? Hahaha!

Wed, 07/25/2012 - 12:20 | 2649712 khakuda
khakuda's picture

Slowly, but surely, the world is waking up.  ZH should get its share of credit.

Wed, 07/25/2012 - 12:21 | 2649715 Hype Alert
Hype Alert's picture

"Consumers are telling you something, they want to pay down debt!"  He nailed it.

 

And I'm really tired of biased reporters cutting off their guests.  The story was planted, get over it.  So Betty, STFU and let the man speak.

Wed, 07/25/2012 - 12:21 | 2649716 Snakeeyes
Snakeeyes's picture

What don't these people understand about M2 Money Velocity? LOWEST SINCE IKE!!!!!!!!!!!!!!!!! It won't work!!!!!!!!11

http://confoundedinterest.wordpress.com/2012/07/25/here-come-the-fed-home-sales-drop-more-than-expected-mortgage-purchase-applications-drop-too/

Wed, 07/25/2012 - 12:21 | 2649717 Sutton
Sutton's picture

We are slouching towards the dreaded "Flow" where constantly increasing rivers of money printing must be forced through the system. Buy physical precious metals- and guns,ammo,food,cigarettes,and booze.

 

Wed, 07/25/2012 - 12:22 | 2649721 tu-ne-cede-malis
tu-ne-cede-malis's picture

Replace Betty Lu with Lauren Lyster asap. 

 

Lu is a fed apologist who needs to listen while those smarter than her are talking.

Wed, 07/25/2012 - 13:43 | 2650002 TWSceptic
TWSceptic's picture

The networks need to behave less as pimps and fire the presstitutes, replace them with people who are able to think.

Wed, 07/25/2012 - 12:29 | 2649747 earleflorida
earleflorida's picture

Indeed, the first QE worked? Could you elaborate kind sir! I'm sick of these former latter-day saints coming out with latent mea culpa's. First, we get Sandy Weill pounding the table for Glass-Steagall reinstatement,... which by the way he was wholly responsible for its demise. But, like Roachs' Hostel postulates... they worked for that particular period - Wow!!!

Pure, unadulterated, radical... "Enrophpic Anachronism" -'reductio ad absurdum', period! 

Pathetic


Wed, 07/25/2012 - 12:30 | 2649751 piceridu
piceridu's picture

Is Betty fucking Liu a lawyer? She feels the need to defend that Jon (Benass licking) Hilsenrath?

Wed, 07/25/2012 - 12:33 | 2649764 Hype Alert
Hype Alert's picture

The planted story was just a test of the waters to QE3 and it too has failed.  The FED is desperate as the addicts may revolt.

Wed, 07/25/2012 - 12:33 | 2649766 ak_khanna
ak_khanna's picture

The politician­­­­­­­s and the Central Bankers are only working for the bankers and make rules only to help those who are useful to them.

They bail out the bankers and the rich corporatio­­­­­­­ns through QE (who should not be in business because of their incompeten­­­­­­­cies­) without even changing their previous management because they fund the election campaigns and also place them in their organisati­­­­­­­ons at exorbitant salaries once they leave office. This class alongwith the rich individual­­­­­­­s pay the minimum amount of tax while getting the maximum benefit of the tax collected from the rest of the population in the form of bailouts.

The rest of the population is least of their concerns. The only activity they do is pacify the majority of the population using false statistics and promises of a better future so that they do not lynch them and their masters while they are robbing the taxpayers.

 

http://www.marketoracle.co.uk/Article35345.html

Wed, 07/25/2012 - 12:35 | 2649773 SheepDog-One
SheepDog-One's picture

'Qe3 not going to work'? Isnt this basically like blasphemy or heresy and he should be getting burned at the stake?

Wed, 07/25/2012 - 12:37 | 2649774 ATG
ATG's picture

Market meth works until it doesn't:

SPX targeting +15%.

MS targeting 3... 

Wed, 07/25/2012 - 12:36 | 2649777 Rich Bagg
Rich Bagg's picture

Shorts are about to be Cornholed once again.  QE3 is like a white hot skewer rammed in the ass.

 

 

Wed, 07/25/2012 - 12:41 | 2649782 SeverinSlade
SeverinSlade's picture

So Hilsenrath is the Chairman of the Fed?  Didn't he call for QE3 before?

I'm expecting an extension of the duration of ZIRP through maybe 2015-2016. That's IT.

Launching QE3 now will result in a brief 10% jump in equities, followed by new 2012 lows.  Then what is the Fed going to do?  Increase the amount of LSAP in QE3?  Launch QE4?  The Fed would be exposed to have lost complete control.

Wed, 07/25/2012 - 12:54 | 2649793 Jlmadyson
Jlmadyson's picture

One last silver bullet for Fed Chairman Hilsenrath!

They are so cooked when this fails.

Wed, 07/25/2012 - 13:05 | 2649883 dracos_ghost
dracos_ghost's picture

Why is anyone listening to this Cock-Roach. His Global Labor Arbitrage gambit was a disaster. His whole economic position is "If they build it in China, they will come" to the point of retardation.

Wed, 07/25/2012 - 13:30 | 2649963 GOLDTEETHSILVER...
GOLDTEETHSILVERFILLINGS's picture

Follow the yellow brick road...

Wed, 07/25/2012 - 13:27 | 2649948 JohnKozac
JohnKozac's picture

Bankers need QE3 almost Bonus time again and my banker said he needs to refurbish his yacht....and, oh yes, that place in the Hamptons...

 

It's doubtfull any will trickle down to the hoi poloi.

Wed, 07/25/2012 - 13:28 | 2649955 SmoothCoolSmoke
SmoothCoolSmoke's picture

The coming QE pop will be the shorting opportunity of a lifetime.

Wed, 07/25/2012 - 13:36 | 2649971 Jake88
Jake88's picture

How is this any different than the Hilsenrath hint. This guy's an asshole. What he is doing here is a Hilsenrath hint squared.

Wed, 07/25/2012 - 13:35 | 2649977 Jake88
Jake88's picture

How about some full disclosure here.

Wed, 07/25/2012 - 13:52 | 2649982 Jake88
Jake88's picture

Even if the Hilsenrath hint was made at the behest of the Fed it doesn't mean QE3 will happen. How long have we been riding high of the hints of QE3. It's a good strategy for the Fed. Rumors of QE cost the Fed nothing and they boost the market. Scary state of affairs when earnings and economic realities mean nothing and QE means everything. This is not going to end well.

Wed, 07/25/2012 - 13:48 | 2650012 doc_in_the_house
doc_in_the_house's picture

who is john hilsenRATH?

he must be a RAPIST DEMOCRATIC DEMON-RAT...obummer fan...their mantra:

RAPE the peasants with DEBT and INFLATION and "save" the fat cat political donor's house of cards ponzi scheme!! its tricle down ODUMMERNOMICS.

me = covered my spx 1370 shorts @ 1332 yesterday..waiting for 1360+ to short and RIDE til 1100 before meaningful bounce back to 1250? --> --> then SUB MARCH 2009 of spx 666 !!!

all the bs QEs won't make sheeple take on DEBT specially @ USURY RATES!!! even at 0% APR why in the world would u want to buy a new car?? = loose job and loose credit !! LOL !!!!

Wed, 07/25/2012 - 13:50 | 2650019 GubbermintWorker
GubbermintWorker's picture

QE TO INFINITY!!

Wed, 07/25/2012 - 14:03 | 2650045 yogibear
yogibear's picture

All the commodity traders know Bernanke and the Fed will do QE to infinity.

Reason enought to ramp oil, corn, wheat, beans, beef, chicken,pork, gold, silver another 30 to 40% in the short term.

Companies like AT&T, Sprint, Verizon, Kelloggs, General Mills, Merck, J&J, Pepsico, Coke, McDonalds, Chilpolte, ADM,etc can all raise their prices another 30 to 40%.

Bernanke and the Fed have to bring the US dollar below record low levels. It will be an event when people are rushing to escape the US dollar.

 

 

Wed, 07/25/2012 - 14:02 | 2650060 Diggintunnels
Diggintunnels's picture

Why can't any of these reporter idiots ask "WHAT IS THE COST OF QE".   Everyone just acts like QE has no down side, costs nothing, and if only the FED would stop being stubborn and deal the drug, everyone would be fine. 

Wed, 07/25/2012 - 14:24 | 2650135 Bicycle Repairman
Bicycle Repairman's picture

What to do, what to do? 

Roache says:

"consumers are telling you something. They want to pay down debt and rebuild saving and all of the monetary stimulus in the world is not going to change what is a perfectly rational response."

He's right. Monetary stimulus won't change that, but I'll tell you what will: tax policy.  Find out who is saving and tax them.  Then have the government spend that money.  And tax their savings, if necessary, and spend that.

I know you hate this idea.  So do I.  Fair warning.

Wed, 07/25/2012 - 14:41 | 2650213 doc_in_the_house
doc_in_the_house's picture

get TAXED on ur savings?

sounds like a "good" idea from a RAPIST (QEorganizer)...however what options do savers have?

1) take $$$$ OUT of country and buy physicals...held OUT of country

the taxed savings will ONLY cause HYPERINFLATION !!! LOL !!!!!! ROFLMAO !!!

personally i rather wait for $300 gold...but if push comes to shove, will have to buy @ this ridiculously high prices IF they will tax savings !!!

Wed, 07/25/2012 - 14:44 | 2650232 doc_in_the_house
doc_in_the_house's picture

NOT to mention what mother natures THINKS

of the QEorganizer's RAPE-O-NOMICS...mother nature gave him the middle finger with DROUGHTS and high corn prices --> INFLATION..

sorry QEorganizer...sorry bernkaRUPT, bQE...LOL !!!!!!!!! ROFLMAO !!!!!

Wed, 07/25/2012 - 14:58 | 2650289 Bicycle Repairman
Bicycle Repairman's picture

Not sure what to make of your comments, but playing devil's advocate again:  if you have enough excess income to save in any fashion, including PMs, I'd tax it away.  How would this taxing manifest itself?  The "fiscal cliff" in 2013 would be a good example.  Would spending this money cause hyperinflation?  No.  Instead of you saving or buying more pointless Chinese trinkets, I'll use your money on American infrastructure.  Said infrastructure may or may not be pointless as well, but your "excess income" will be spent and I'll make some friends.

All the current PM ownership of American citizens and residents, regardless of where it is held, doesn't amount to a hill of beans.  As a bureaucrat I couldn't be bothered.

Wed, 07/25/2012 - 15:02 | 2650306 Self Trader
Self Trader's picture

QE3 wont be crack, but bath salts.

Wed, 07/25/2012 - 15:18 | 2650394 ultraticum
ultraticum's picture

"We had QE1 which worked ... ". For whom, douchebag? What a joke. Next.

Wed, 07/25/2012 - 15:42 | 2650492 madridisburning
madridisburning's picture

Roach misses one point. The Fed wants to pump up the markets so it can get consumption spending to 110% of GDP if possible, even if every consumer spends himself to the point where he will be living in the street in old age. But, pumping up the stock market can create a false prosperity that encourages consumption, just like it did during the Internet bubble and the housing bubble.

Wed, 07/25/2012 - 15:50 | 2650527 Randy Goodnight
Randy Goodnight's picture

Did you notice that when he said "dangle some raw meat in front of . . . ) that interviewer Betty sat up like a lap dog ready for a snack!!

Wed, 07/25/2012 - 16:17 | 2650615 mt paul
mt paul's picture

freebasing

da fiat..

 

" people get out of your way

when you're running down the street 

on fire. "

 

Richard Prior.....

Wed, 07/25/2012 - 17:17 | 2650881 ChacoFunFact
ChacoFunFact's picture

"The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies.  Over the past 5 years, our federal debt has increased by $3.5 trillion to $8.6 trillion.That is “trillion” with a “T.” That is money that we have borrowed from the Social Security trust fund, borrowed from China and Japan, borrowed from American taxpayers. And over the next 5 years, between now and 2011, the President’s budget will increase the debt by almost another $3.5 trillion.  Numbers that large are sometimes hard to understand. Some people may wonder why they matter. Here is why: This year, the Federal Government will spend $220 billion on interest. That is more money to pay interest on our national debt than we’ll spend on Medicaid and the State Children’s Health Insurance Program. That is more money to pay interest on our debt this year than we will spend on education, homeland security, transportation, and veterans benefits combined. It is more money in one year than we are likely to spend to rebuild the devastated gulf coast in a way that honors the best of America.  And the cost of our debt is one of the fastest growing expenses in the Federal budget. This rising debt is a hidden domestic enemy, robbing our cities and States of critical investments in infrastructure like bridges, ports, and levees; robbing our families and our children of critical investments in education and health care reform; robbing our seniors of the retirement and health security they have counted on.  Every dollar we pay in interest is a dollar that is not going to investment in America’s priorities."

 

 

Senator Barack Obama

Senate Floor Speech on Public Debt

March 16, 2006

 

Wed, 07/25/2012 - 19:25 | 2651306 Fruitcake
Fruitcake's picture

Not sure my portfolio of gold miners agree that QE3 is not going to work !

Thu, 07/26/2012 - 17:51 | 2654789 Remington IV
Remington IV's picture

Barton Biggs . . . Byron Wein . . . Stephen Roach

 

see no evil , hear no evil , evil

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