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Post by looter on Aug 22, 2011 23:55:14 GMT -5
Last week we had Citigroup warning that the market bottom is about to fall out, as the Fed is more than likely to disappoint already very lofty expectations (according to various estimates from both Goldman and the second Tier banks, i.e., all of them, the market has priced in roughly $500 billion in QE3 already). Today, Bank of America, which may or may not be with us much longer, has taken this desperate alarmism several notches further, and is warning that due to the gridlock in both the fiscal ("fiscal authorities have bombarded the markets with a quadraphonic message of hopelessness") and monetary ("the Fed is out of bullets anyway") stimulative pathways, the likely outcome of anything from DC will be nothig short of a disaster. To wit: "rather than a repeat of 2010, when the Fed saved the day with QE2, we think we are moving closer to a repeat of 2008, when major policy errors devastated the economy." For once we actually agree with Bank of America: "In our view, the pressure to “do something” is now far more likely to result in more desperate or radical measures, even if it is bad policy." Does this mean that we are looking at a TARP "vote down" market reaction this Friday if indeed the chairman disappoints? We will know for sure in about 100 hours, which just may be the longest 100 hours for bulls since the start of the artificial and solely QE inspired bear market levitation in March of 2009. www.zerohedge.com/news/bofa-warns-upcoming-desperate-measures-authorities-will-result-another-2008-market-collapseThe Banksters are out of their allowance of QE and need another fix. Gonna be an interesting next couple of weeks... |
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Post by looter on Aug 23, 2011 7:21:01 GMT -5
What a world... The Fed is on a tightrope. The slightest tightening and we fall into a deflationary spiral. The slightest increase in loosening and we risk further credit rating downgrade.
Its seems like folks are all for less inflation until the Dow gets prison-raped for a few weeks. Then it's by-all-means loosen, no... really loosen! "Make the Dow higher there Ben, even if it means we pay more at the pump, I just can't take another hit to my retirement account."
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At any rate, the credit portion of the money supply always scares me. Credit = confidence, and its a fickle mistress. When credit comprises the majority of the money supply, epic deflation, if not all-out bank-runs are inevitable from time to time.
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Can you imagine having the Bernank's power? This friday he could send the entire global financial system back to the Dark Ages. On the other hand he could spook overseas creditors into dumping their dollar assets, creating hyperinflation overnight.
This is gonna be a VERY interesting week.
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Post by Grainbelt on Aug 23, 2011 7:37:14 GMT -5
OBG,
I've gone back and forth on this Bernanke guessing game. I was convinced for a time the politics of QE3 were so against it that he would talk but wouldn't move. The more I think about it though.....His belief that monetary policy is the ultimate arbiter of economic performance is so engrained in his mind, plus he has no oversight, and he is totally confident that he has complete knowledge of his abilities that I don't see anyway that QE3 is not right around the corner. The elected pols don't have the willpower to raise revenues to pay off the debts they have incurred. Ben has no qualms about backdoor taxing the populace.
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Post by glowplug on Aug 23, 2011 8:17:57 GMT -5
Grainbelt,
You could tax the "rich" at 100%, yes take it all, and not make a dent in paying govt. debts. It isn't a revenue problem. It is a govt. spending problem. We have 49% of the population addicted to govt. entitlement programs.
Smaller govt. is the answer.
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Post by looter on Aug 23, 2011 8:35:50 GMT -5
Grainbelt, You could tax the "rich" at 100%, yes take it all, and not make a dent in paying govt. debts. It isn't a revenue problem. It is a govt. spending problem. We have 49% of the population addicted to govt. entitlement programs. Smaller govt. is the answer. Not to fight GB's battles, but I THINK GB was referring to the "inflation tax". What i got from his brilliant post is the pols are cowards and will use slight of hand to extract their pound of flesh rather than direct confiscation. Dunno if I got it right though... |
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Post by glowplug on Aug 23, 2011 8:42:39 GMT -5
You're correct. Printing money creates inflation. It then takes more money to buy groceries, gas, etc. I saw this in hyper mode during Jimmy Carter.
obummer plan is larger govt. We can't afford the govt. we have now. Paying welfare recipients not to riot by subsidizing their lifestyles is going to end. Invest in brass-lead and for alliances with your neighbors.
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Post by Grainbelt on Aug 23, 2011 11:16:58 GMT -5
Grainbelt, You could tax the "rich" at 100%, yes take it all, and not make a dent in paying govt. debts. It isn't a revenue problem. It is a govt. spending problem. We have 49% of the population addicted to govt. entitlement programs. Smaller govt. is the answer. Not to fight GB's battles, but I THINK GB was referring to the "inflation tax". What i got from his brilliant post is the pols are cowards and will use slight of hand to extract their pound of flesh rather than direct confiscation. Dunno if I got it right though... You are correct OBG. Every time Bernanke "increases bank reserves" he is unilaterally raising taxes on us all. No one bitches about it much and he doesn't need to get it thru 2 houses of congress or signed by a President either. QE3 is a lock. |
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Post by thirsty on Aug 23, 2011 18:23:53 GMT -5
Quantitive Easing is so multi-purpose its like the swiss knife of monetary policy. Its uses include liquifying the system (primary dealers sell treasuries for fed dollars, takes cut on marketing govt debt), giving the Fed a tool in which to hammer down interest rates (the overnight rate is not what you think it is), and it gives the US govt a dummie to sell its debt to while it goes a trillion in a half in deficit due to lack of domestic economic performance. Mind you maybe it isn't so dumb after all, if I could just print dollars to amass the bonds of the largest tax collector on the planet that would be pretty smart. Senior bondholder always calls the shots in bankruptcy, don't forget that! In other news the Germans say,"We accept gold, good looking hookers and industrial holdings as potential collateral for any future bailouts." www.zerohedge.com/news/vice-chairman-germanys-cdu-party-demands-gold-collateral-european-bailout-recipients |
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Post by Dave-ECIA on Aug 23, 2011 18:59:30 GMT -5
That has got to be the best financial quote I've heard in quite some time. It's destined for the bulletin board. |
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Post by linsal on Aug 24, 2011 20:10:15 GMT -5
Just found this interesting little nugget on CNBC: The managing director of the IMF, Christine Lagarde, has asked to be placed on the meeting agenda on Friday...that should be interesting! So, is Bernanke going to get whacked into not doing a QE3?
While markets are hyper-focused on the Friday speech at Jackson Hole by Federal Reserve Chairman Ben Bernanke, they are overlooking what could be an equally important Saturday appearance by International Monetary Fund Managing Director Christine Lagarde.
Yoshikazu Tsuno | AFP | Getty Images
French finance minister Christine Lagarde is seen as a front-runner to succeed Strauss-Kahn.
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In a last-minute program change, the IMF requested that Lagarde address the premiere meeting of the world’s central bankers in exchange for outgoing IMF First Deputy Director John Lipsky. He briefly took over the fund during the Dominique Strauss-Kahn affair and will stay on with the fund as a senior advisor.
Lagarde’s appearance is more than just a coming out event for the new managing director. Indeed, as the former French finance minister she knows many of the players here in Jackson Hole. But an IMF managing director hasn’t addressed the group since 2004.
Lagarde appears at a time of global turmoil over fiscal, monetary, and currency policy. The alliances and co-operation that dominated the reaction of the world’s leading nations through the Group of 20 Nations (G20) to the 2008 downturn are looking increasingly frayed. At the Fed and at the Treasury Department, U.S. frustration is growing over the inability of Europe to forge an appropriate response to either its banking or sovereign debt crises. Sources say U.S. officials have even crafted ideas to help Europe, but keep being turned down through back channels. These officials fear going public with their ideas since they could be seen interfering with European affairs.
Steve Liesman
CNBC Senior Economics Reporter
Meanwhile, European officials both in monetary and fiscal circles are critical of massive U.S. deficits that show little sign of abating, and the brinksmanship politics that nearly brought the nation to default in the debt-ceiling debate. Many also think the Fed is way too far out on a limb in its super-accommodative monetary policy.
The specific criticism behind the scenes is that Bernanke is relying too much on “the output gap” model, in which high unemployment and overall economic slack is seen giving the Fed room to ease because it means low inflation. European monetary authorities tend to rely less on this view of the world and point out that the amount of slack in the economy is only ever visible after the fact.
With this backdrop, Lagarde will take the stage on the same day that outgoing European Central Bank President Jean Claude Trichet will speak. It will be a measure of Lagarde's skills whether she can at least begin the process of getting the leading nations on the same page to address this second wave of the financial crisis. Finance ministry officials from around the world are struggling behind the scenes to craft an action plan for the upcoming G20 meeting in France in November. One official says if the G20 can’t come together now, it may have outlived its usefulness as an organization.
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mfs
Hired Hand
Posts: 163
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Post by mfs on Aug 24, 2011 21:40:51 GMT -5
Not that this worth anything, I was rather surprized my brother left BAC -- and so were they. He had a rather prominent position and resigned a month or more ago. He is leaving for similar position with State Street which is essentially a custodial bank with no branches. Neither of my sisters or brother have asked him why? State Street gave him off the months of August and September. We had a funeral in St. Louis this last week and never said anything of what at work. State Street should not suffer the same consequences of other institutions as essentially a custodian repositor. They have over $16 trillion they oversee. The world is at risk financially.
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