Should the unemployment rate continue to tick higher, will the Fed do QE3?
If so, how will it affect commodities, currencies and equity markets?
Feel free to kill each other over differing opinions.
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There will be no QE 3…bad for politics
WRONG!
QE3 isn’t some sort of option, as it’s conveyed in the mainstream media. The media is complicit in making it seem as if there’s a big decision being contemplated by our wise leaders in DC. Nothing of the sort is happening.
UN Agenda, a worldwide mandatory directive of the privately-owned World Bank and IMF, in conjunction with the most powerful financial institution on the planet — the Bank of International Settlements, specifically focuses on wealth redistribution by way of a US currency slow-motion collapse. Do it slow enough, and no one will protect their money or panic.
The grandiose pretend-play we are seeing on TV and in the newspapers is nothing more than artfully crafted propaganda designed to keep the peons in their place, compliant, obedient, stupid, and useful.
Fabian socialism under banking oligarchal rule is our destiny. Embrace it with a wide smile, or be disappeared.
Agenda 21, that is.
As opposed to huge drop in the markets and rise in unemployment? Can you name a President who got reelected in that scenario?
Robert Mugabe.
Barak Hussain Obama-Bush III in 2012.
Mr Soros will get his home-boi reelected. Count on it.
First! What do I win?
Nice try, play again next time
First pick of a fema trailer
No.
fig, dammit
yes and up. we are chopping around just below yesterdays low. Give it a few minutes and I think we are back at yesterday. Only difference is I have more WNR, and EDZ shorts (via options)
I know I said I wouldn’t post anymore. but this is my last post ever. reading the comments on this site like these is giving me ulcers.
Do you even know what you are trading against EDZ.
1. you trading a highly leveraged etf only good for intraday moves or highly directional bets.
2. EDZ is a derivative of a (MSCI emerging markets index) which itself is derived from a basket of stocks.
3. On top of all of this you are trading a derivative of EDZ via options.
You’re trading a derivative, of a highly leverage derivative, of a derivative. If you can calculate all the deviations from your option to the basket of stocks that MSCI is tracking (on top of the 3x leverage) then bless your soul. Most of you should just stick your money in a CD. If you want to gamble, go to your casino.
Unbelievable.
John, nicely played sir. Nicely played. You just schooled a guy so hard he doesn’t know if he’s learning a lesson or getting an ass whooping. Fantastic.
I believe it’s both
Very smug way for you to go out. Well played.
John, I hope you change your mind and continue to post here. However, if you don’t post here, please go to the COMPX board at Clearstation and post your stuff there. I check that board sometimes, although it is a lot less interesting than this one. I enjoy your posts.
Frog
what’s the big deal? If you think emerging markets are going down, buy EDZ. Its not rocket science. It has plenty of volume, so all those trades cant be stupid like you.
The fact that you didn’t digest the original post and the response makes me believe that you are in fact a Texan, but more importantly, a very stupid person.
Yeah, Texas really sucks.
Full of “stupid people” but the best economy in the nation.
By far.
You should be so stupid, Nancy.
________
yeah, what he said!!! Thanks for backing me up Jake. Anyway, I think it is vapid to go on and on about derivatives when trading comes down to only two things: Do you think it will go up, or do you think it will go down, provided the vehicle has liquidity. As for Texas, why do you hate on us so much? Both George Bushes are gone.
Back in the day when you got a mortgage your bank actually held your debt obligation. Then some bright guys said hey guys lets securitize these mortgages and sell them off and collect the spread. Later on some other bright guys said hey guys lets mix these mortgages into different tranches and pay investors for the risk relative to each tranche. Then some other smart guys were like hey guys, lets build some insurance securities against these mortgage securities. You know the rest.
What you have there is a derivative of a derivative of a derivative. You go so many derivations out of what the underlying is trading at some point you have absolutely no damn clue as to what you are actually trading. So yes, as you say, I am stupid because I like to trade vanilla stocks and keep the equations to my understanding. As to your other point of just buying/selling if you think it is going up/down, you think every trader on the wrong side of their CDO/CDS actually thought they were on the wrong side of the bet.
All derivatives are a bet.
So were PPN backed by Lehman.
But please keep posting, and go find Devildog – I would love to see a cage match between you two.
Welcome back john, that was quick
The financial system is a derivative of a derivative of a derivative of a derivative and so on. Gold was a derivative of perceived value, then paper money could be exchanged with gold making paper money a derivative of gold. silver dollar was treated as a derivative of gold, and then a paper dollar was a derivative of a silver dollar. The monetary system changed allowing a loan and cash to be a derivative of the old paper money as banks only had to hold 1/10th of the gold they lent out. Then they moved to a fiat system and paper money became a derivative of the old money and it made money a derivative of money backed by debt backed by money backed by debt and so on.
If you think holding a derivative is dangerous, so is holding cash or anything else that is derived from the cash you use to purchase anything else!
It’s not the fact that it’s a “derivative” that makes it dangerous, it’s the (lack of) understanding that makes it dangerous.
well spoken. I am from Texas so I could never have put it so succinctly. Just ask Go-Go girl. I wonder if she has $2B in managed accounts.
Yes you are spot on. The point is the more derivations you go out the situation becomes exponentially more difficult to understand. You increase the variables several times over every layer you go down.
john,
point taken. but, do you really have to know exactly what’s in a cdo/cds (or other vehicles) to trade?
if you know what the other traders who trade them think they are worth, would that suffice to be successful?
do you need to know how fuel injection works to drive a car?
what is the dollar? is it a derivative of value?
how is value derived?
is it the sum total of what the buyers and sellers think it is at any given moment?
if the man wants leverage on leverage & he can handle a loss, who can object?
Knowledge is power.
Understanding fuel injection makes driving more fun, and I would posit that most professional race drivers know how fuel injection works.
But car salesmen can’t pull a fast one on you if the fuel injection system isn’t working. Brokers with derivatives can because it isn’t immediately obvious that something is wrong.
How could he put it in a CD? He is probably buying on margin! LMAO
It’s an in the money bearish call credit spread, which gives me the double advantage of taking in premium on the options and on the underlying security itself. Yes I do the math and I am over 50% in cash.
but really I am up 24% so far today on this position, with a 1 to 1 risk to reward possible.
John are you up 24% today on any of your positions?
The intention was to never call you out. I’ve been trading for so long that yes, I will have an ulcer when I see, in my opinion, an absolutely whacked out trade. As I said, if you can handle all the deviations from options to the several layers of underlying then bless your soul, you’ve got the brain power of 100 of me.
However, just to note, with a credit spread you’re (i am assuming vertical spread) naked short one leg of your trade in a highly illiquid market. If you weren’t getting huge volatility in your PnL in your position I would have been hugely suprised. I don’t know how you got your Risk reward to be 1:1. Your downside is practically infinite. I’d understand it if you said your Expected Value is positive, but there is no way your risk/reward is 1:1.
Your situation is actually worse. I actually thought you were long puts, instead naked calls on a net basis. You’re trying to pick up pennies in front of a bullet train. Your up 24% position in your position, but try closing that position out without taking some huge slippage.
I am not making a habit of posting. I am keeping my responses to this thread and will quit when its dead.
You sell the short side of the spread a couple of strikes in the money and you buy an equal long side of the spread a maybe one strike out of the money. You have to adjust dependent on the specific spread, but yes it is a hard and fast 1:1.
put simply you short an in-the-money call. you buy an out-of-the-money or at-the-money-call as your stop loss.
naked shorting is for losing long term, so I don’t do it.
Then may it never die.
BTW, John. your comment made me re-scrutinize what I am doing. Thank you.
Depends on what commodities we’re talking about….QE3 destroys the dollar however….
There will be QEIII…just called something differnt…where most of the illiterate americans wont know what it is or means..
quantitative wheezing?
The answer is:
Republicans, Democrats, Republicans, Democrats. One party is God, the other party is Satan.
Repeat after me: All problems in the U.S. are caused by the other political party/ideology– the one of I am not a member of. All good solutions come from my party/ideology. All evil, and all obstruction of good, comes from the other party.
Special Interest Group ownership of all politicians has nothing to do with the mess our economy is in.
Can you repeat all of that? If so, good slave, good slave.
Yeah, throw up your hands and give up.
Doing nothing is a decision as well. If you think it’s fucked up, get a grip and do something about it.
And as for your “Special Interests” oft-repeated mantra, here’s the reply again:
_____________
The world is made up of Special Interests, there is no way to prevent free people from gathering to express their views to their government and fellow citizens, so just give that idea up.
The questions we have to ask is “what’s the best way to accomodate The People’s (Special) Interests?”
Is it by allowing Congress and the Executive to get as powerful as a King, so that pleadings are sold to the highest (and largest) bidders as they were in feudal and fascist days alike?
Or should we devolve government as locally as possible, so that special interests can only influence in certain spheres, and free people can choose amongst whose influence they wish to live under?
Think about it — if you don’t like liberal bullshit, you don’t live in San Fran, you move to Dallas, or Phoenix.
And vice versa if you don’t like my conservative bullshit (aside — and you can choose between the Texas economy and the Cally one as well). This should be the way of the land — not autarchy and “one size fits all.”
Posited: Take the money out of the Federal power base, before you give up all your freedom to a hodge podge of indiscriminate rule makers that will eventually leave NO ONE happy.
Amen brother!!
Nice use of html
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It wont be called QE III but there will be some easing ahead. After that round of easing the prices of food, gas, and cotton will have the “poors” protesting in the streets and media will villainize the wealthy which will erupt into a class war.
It will be called Das Kapital in honor of Obama’s favorite author.
The sequel:
Gimme Das Kapital!
______
How can anyone give that the thumbs down? True and funny.
WNR blows. Particularly this guy–
http://www.google.com/imgres?imgurl=http://www.uncoverage.net/wp-content/uploads/2011/05/Screen-shot-of-wiener-485×358.png&imgrefurl=http://www.uncoverage.net/2011/05/congressman-anthony-weinergate-should-resign-now/&usg=__z0JpYTF123w-PVzOoD5oWZrl_iY=&h=358&w=485&sz=215&hl=en&start=44&sig2=PCVSBN_T5GK22AQN5MqPxw&zoom=1&tbnid=MySw32jn9B4eAM:&tbnh=125&tbnw=167&ei=VfroTdyVNOTZiAKokeiPAQ&prev=/search%3Fq%3Dcongressman%2Bweiner%2Btwitter%2Bphoto%26um%3D1%26hl%3Den%26sa%3DN%26rlz%3D1R2GGLL_en%26biw%3D1003%26bih%3D571%26tbm%3Disch&um=1&itbs=1&iact=rc&dur=109&page=4&ndsp=15&ved=1t:429,r:5,s:44&tx=67&ty=72
“Should the unemployment rate continue to tick higher, will the Fed do QE3?”
Some form of it, perhaps something entirely different but also expansionary.
“If so, how will it affect commodities, currencies and equity markets?”
I really think it depends
If it’s a monetary expansion that leads to a credit expansion, it may actually adversely impact commods like precious “mentals”
Dick Bove’s comments about unleashing the banks reserves seem interesting and we could see something not entirety different to what he’s suggesting.
see here:
http://www.google.com/url?sa=X&q=http://www.businessinsider.com/dick-bove-qe3-time-unleash-the-banks-2011-6&ct=ga&cad=CAEQARgAIAAoATAAOABApuqj7wRIAVAAWABiBWVuLUFV&cd=Z2Lyfh_rT3w&usg=AFQjCNF5P4FrcK5lx2JuFh8iIcSfrzsbZA
Bove’s suggestion is unsophisticated however I think he may be on the right track.
If it comes by way of a credit expansion it will have a much different impact and will be similar to the 90’s. Then you buy shit like the industrials, tech and refineries and the bangstas(;-))
They will do do something, however I’m not sure it will be in the same form as Q3 as the bond market may not take it well.
Well said as usual.
J, why would you listen to a guy that has been catastrophically wrong since 2007.
Yea. If he makes a good point I’ll listen to anyone. Not blindly.
We need a $500 billion REAL stimulus plan. Build infrastructure and award cash bonuses of
$50,000 to companies for every job created HERE. And tax those goddam corporations
at 100% of the annual wage of jobs they transfer overseas, like call centers, etc.
You were supposed to have that with the last one where 787 billion went down the demolition party plug hole.
You build infrastructure as and when you need it , not when you think you have to to get the economy going . This take money away from the rest of the economy.
As for the other stuff. You are just making the economy less efficient.
I mostly agree, but have you driven around this country lately?
Look I hear that stuff here in Australia all the time. There are two points I make about this.
1. look around the world. It doesn’t get much better than what our countries both have.
2. Hayek said … he compared just serviceable roads in the UK and the major autobahns in Germany. Although the roads were superior in Germany it was overdone and the serviceable roads in the UK were more than enough for the UK at the time.
In any event most of these infrastructure projects could be provided by project finance from the private market to a large degree.
500 Billion?
We tried 6 Billion on the ARC Tunnel and Republican Chris Christie Cancelled that infrastructure project.
We also tried to give Florida 2 Billion for initiating HSR and that was cancelled by the Republican governer.
500Billion? Puhlease with Tea Party and these Republicans we wouldnt get passed 10Billion unless it had to do something with Drill Baby Drill.
Infrastructure and Mass Transportation are a waste of money in the eyes of the republican agenda.
Your analysis is foolish.
Those projects were cancelled because the co-funding WAS NOT THERE in the states they were to which they were allocated. In other words, those “big digs” would have left those states in an even deeper hole than the one they were already deposited.
Read more than the surface headlines, and gain understading. THEN post.
____________
ok…who cares. They’ll still screw it up.
Whether or not the unemployment rate continues to tick higher, the Fed has no choice other than to continue to supply QE. With few real long-term Treasuries buyers, the Fed must create enough money to continue to monetize the Treasury Bond market.
The Fed lends the big Wall Street banks money at zero, and the big Wall Street banks use that money (even leverage it) to buy long term Treasuries. They make 3% (far more if using leverage) on the spread. This is why MS, GS, BAC, C, and JPM have perfect trading quarters. The carry trade with the Fed is a guaranteed money coining machine for the NY Fed banks (and WFC). This is one more way in which the Fed funnels taxpayer money into the banks owned by its Primary Dealers (PDs).
If the Fed doesn’t monetize, and if interest rates on long term Treasury instruments move too far north, then the Wall Street banks will lose money on the long-term Treasuries they hold. The Fed is not about to let that happen.
“The Fed lends the big Wall Street banks money at zero,”
No it doesn’t. In fact it’s the other way around. The banks are on deposit to the fed as they have free reserves parked there.
The Fed does not lend money to the banks unless you are actually suggesting the banks are currently at the Fed window and they are not. The Fed guides o/n cash rates down.
But go on, argue against this. I’m sure you will.
“No it doesn’t. In fact it’s the other way around”
No, it is just as I said. If you are really interested in the way Fed/Bank carry trade works, you might want to take the time to read this:
http://www.nakedcapitalism.com/2011/06/guest-post-congressional-research-service-confirms-big-banks-borrowed-cash-for-next-to-nothing-then-lent-it-back-to-the-federal-government-at-much-higher-rates.html
Wrong. The link doesn’t say what you said. You said the Fed lends money to the banks. It doesn’t.
You’re wrong and you misread the link, not that there”s much to learn, seeing they are quoting Chris Whalen who has been bullshitting and lying to the point where it’s unethical at times.
J is more right, but Baron is correct in stating that the banks are getting a free ride by artificially lowered Fed rates (caused by the Fed providing its own liquidity):
What’s worse than even what Baron is implying is that the banks are getting a “gov’t assist” (Fed assist) in fleecing their own customers!
Because the US government is lending money to the big banks at near-zero interest rates. And the banks are then turning around and lending that money back to the US government at 3%-4% interest rates, making 3%+ on the spread.
(that part is inaccurate. The US gov’t is not lending to the banks, the US depositor is! )
What’s more, the banks are leveraging this trade, borrowing at least $10 for every $1 of equity capital they have, to increase the size of their bets. Which means the banks can turn relatively small amounts of equity into huge profits–by borrowing from the taxpayer and then lending back to the taxpayer.
Eggsactly.
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“J is more right, but Baron is correct in stating that the banks are getting a free ride by artificially lowered Fed rates (caused by the Fed providing its own liquidity):”
I agree 100% Jake. I don’t think there’s any question there is a transfer subsidy going on.
thanks
” You said the Fed lends money to the banks. It doesn’t…
Then perhaps you could explain this from Bloomberg News:
“In April, Bloomberg News revealed that foreign banks were the biggest recipients of the Fed’s discount loan program during the height of the financial crisis. And if foreign banks getting emergency cash wasn’t bad enough, Bloomberg has uncovered another absurdity from the recession-era financial markets: it’s now estimated that the Fed dolled out $80 billion in secretive loans to banks, and some locked in interest rates as low as 0.01 percent.”
“You’re wrong and you misread the link”
No, this is exactly what the link stated:
“To get a clear picture of what is going on here, ignore the intermediate steps (borrowing money from the fed, investing in Treasuries), as they are riskless, and it immediately becomes clear that this is merely a direct payment from the Fed to the banking executives…for nothing. ”
J, when you let your sense of blind confirmation bias selectively shield your cognitive mind from the facts, you do yourself a disservice.
That’s foreign banks… which are for the most part other “central” banks like the Fed, whose collapse would warrant global catastrophe.
Not the same as the relationship between the Fed and it’s depisitories.
Get your definitions straight, Baron.
__________
Baron
You’re now talking about the 08/09 era. There was money lent by the Fed to the banks back then through the discount window. That is correct.
However your point was being made about the present… Now! The Fed doesn’t directly lend money to the banks. at this point in time.
” The Fed doesn’t directly lend money to the banks. at this point in time”
How would you know that? It took 3 years to find out how much, at what rate, and to whom the Fed was lending to in 2008. I understand all too well the difference between the Fed Funds rate (overnight bank to bank lending rate) and the Discount Rate, which was, historically, higher than the Fed Funds Rate. Now, after two years of secret Fed lending, we find that higher rate no longer be the case. When we were informed back in 2008, that the discount rate was open, we marveled as to why a bank would borrow at such a high rate. Now we know, any bank that was borrowing, was borrowing at a rate far lower than the Fed Funds Rate.
The Fed is a private, highly secretive organization. It fights audits. What we do know is that QE2 went directly into the hands of the NY Fed’s Primary Dealers. The most important of those being GS, MS, Merrill Lynch (BAC), Citi and JPM. Those PDs decide how that Fed Reserve money, created out of thin air, will be spent. It gets spent on the long-term Treasuries those banks have been holding, on their junk mortgages (approx 15% of the total QE2) and at Treasury auctions, because the Fed is not allowed to bid directly. Handsome fees are paid to the PDs. The US taxpayers are paying those handsome fees.
The Money Trust banks are enriched in other ways from the Fed. It’s hard to ignore Maiden Lane 1, and what it did for JPM. Then there were Maiden Lane 2 & 3, and we know who got rewarded and who got stuck with that Bear Stearns/AIG toxic waste. Then there was $1.25 trillion worth of impaired MBS bought by the Fed, through the PDs, from their own banks at face value, with the US taxpayers, once again, holding the bag.
The names of NY Fed officers and Board memembers, Stephen Friedman (GS), Jamie Dimon (JPM), William Dudley (GS), Jeff Immelt (GE) and Tim Geithner should tell us all we need to know about who owns and controls the Fed. Bernanke is just the hired help.
Have they paid back and closed out those loans then? Would you even know if there were new ones? It’s hush-hush time in the realm of bankster shadow-overlords.
“If so, how will it affect commodities, currencies and equity markets?”
More QE means a weaker USD. A weaker USD means higher gold prices, commodities prices and commodity currency prices (FXC, FXA). However, when it comes to currencies, the euro is a wild card. If the Bank of Ireland follows through with its 90% haircut to bondholders, the euro will get smacked. Ironically, German exports will flourish with a trashed euro. German banks holding covered bonds (that, unlike US MBS, stay on the banks’ books even after sold), not so much.
That is the Trillion Dollar Question…..You know I hate the Clam. OK here are my thoughts. The Clam has to deal with the next president, he was appointed by a Republican President so why would he be so willing to help a Democrate President get re elected?
The Clam works for the same Special Interest Groups who decided on the current president– especially the banks. Obama has bowed to the banks at every turn, like a good puppet, just as GW did. GW was rewarded by the banks with a 2nd term for his loyal puppethood. It will be the same for Obama.
Oh, I forgot, these are supposed to be 2 very different political parties here. Will someone please explain to me again how they are different? I have heard that they are. I just don’t see any evidence of it.
Stop calling it “Special interest groups.” You obfuscate the reality. The Clam works for the Fed bank cabal, and has a huge stake in perpetuating its continuation, moral hazard risk free.
I don’t have a problem with fractional banking, as long as the risk part of the equation remains in place to govern their activities!
If that does not happen, you will continue to see misallocated bailout funds into perpetuity.
______
The Clam will suck up to whoever is the POTUS.
I will do no such thing the president works for me
Look I disagree. The clam is doing the best job he can within the constraints of the economic system.
We no longer have an asymmetrical ability to move prices down easily without causing serious pain. One look at the housing sector would explain that. Sectoral deflation where there is high leverage would destroy the US economy. That’s not to say there isn’t deflation in various sectors of the US economy: good deflation like in the technology sector. However if you look a the tech sector firms are load up with equity and not debt for a good reason.
For the larger proportion of the US economy material deflation would kill the economy and make the Great Depression look like a walk in the woods.
So policy has to be skewed towards inflation.
I’m not advocating the fiat currency system by the way as I think it sucks.
Imagine the screams if there were large downward shifts in nominal wages for instance. However people being people accept cuts in real wages more readily.
That’s why Fly often mentions the $100 tomato.
I really think the clam is doing a decent job with what he has to play with.
Scott Sumner is worth reading. He thinks the Fed is now on a nominal GDP target of over 5% and will do what it can to try and maintain such setting at the level. I think he’s right.
http://www.themoneyillusion.com/
(Pick the threads where he talks about targeting nominal GDP).
He arrives at the interesting conclusion in that the FED really screwed up on 08/09 by allowing nominal GDP to collapse. He thinks if it didn’t Bear and Lehman would still be around now. Sumner hopes the Fed has learned its lesson.
Although I agree with some of what you said in there, I am naturally impelled to thumbs down anything that is complimentary of the Clam. Unless it is soaking with sarcasm.
are you insane again??? why would anyone fuck up thier career over politics? his reputation is worth more than that. if he fucks up the system, its on him, not the president.
It obviously doesn’t fuck up anyone’s career as a government official, to destroy the economy or the country. Plently of people have done it and their careers have gotten better and better paid.
Real Texan…If he goes all QE3 and it fails, his reputation is gone and so is his job cuz the next president will ask him to leave early if he isn’t gone yet. If he takes a “wait and see”, he is remembered as a Fed Head who stopped the first crisis and allowed congress/prez to take the lead and screw it all up……………………..Casca…true….Frog one has a donkey and one an elephant…see they are different
He doesn’t care if he goes down in an avalanche of shit. What’s he sprucing up his resume for? He’s top dog already. He’ll go golfing, and maybe get a swanky appointment to Goldman Sachs or JP Morgue. Have you kept track of how many times the Bernanke has already been extremely wrong in what he says? “The housing market is not in a bubble” “Banks are well capitalized” “My beard is not the best on earth”. Wrong Wrong Wrong. It doesn’t matter as long as he pushes the bankster agenda.
I really don’t like the Clam at all.
tell me one thing he said that turned out to be right
Wrong. The clam was appointed by the shareholders of the Federal Reserve via the President.
Under Senior Bush, do you really think a Democrate would have gotten the position?
No. But, regardless of whether the person appointed to the Fed is carrying a donkey or an elephant, he answers only to the Too Big to Fail Banks, not to either political party, not to the president– except as a big pretend game, since the president is a puppet of the banks.
I think the evidence so far is that QE 1 and 2 have done little and QE2 had less bang than QE 1. So for a QE 3 we have to get to the “OMG do something!” level of angst. For that we need a lot higher unemployment and a significant re-emergence of the threat of deflation i.e. a market drop of 15%+. Get those and maybe we will get a QE 3. Impact on inflation and commodities? Inflationary – highly.
#1 Yes, to the detriment of our republic. #2 commodities will rise, dollar will fall, traders/investors will reluctantly be forced into buying the bubble. There is one (and only one) fix and that is for the fed to cease and desist. Let the markets discover price and let the strong take assets from the weak. Anything other than this is futile unless we become something other than a true capitalistic society.
“unless we become something other than a true capitalistic society.”
Can you tell me when we really were ever a “true capitalistic society”?
1783 or so.
______
until 1941 or so less than 5% of the population was paying taxes. That’s capitalistic enough for me.
Paying voluntary taxes to the governing body for defence and space colonization efforts is okay. Paying a quarter of your income (half your taxes) to a few dudes for the right to use their currency (shareholders of the federal reserve) is lunacy of the highest order.
i.e. interest
The FED won’t do the QE3. It costs money and debt ceiling implies austerity. Yes, even if debt ceiling gets extended, you are facing the same measures as we are here in Europe. Say hi to austerity and higher taxes to repay debts.
Oh, and if so (no QE3), how will it affect commodities, currencies and equity markets?
In the unlikely event that they cut government salaries by 2/3rds, outlaw war, and tell the banks to fuck off and die because it’s their fault for making high risk loans, then a lot of people would be bitter, but the country (average Joe) would be far better off when the smoke cleared. But truly commodities and stocks would drop off like my trunks in a hot tub.
I’d give that less than 5% odds.
QExx is coming until we’re completely broke and living like a central africa shit-hole. Until then I expect $200 potatoes and $20,000 for a hooker! Good grief.
I already pay $20,000 for a hooker. Will this mean $2,000,000 for me?
You may want to rent a cheaper model in the future.
I tried but his beard was quite annoying.
If the economy continues to worsen into next year more QE could be possible. Should that come to fruition same rinse and repeat. Gold to 1850 and Silver to 60 and commodities spike before the inevitable crash. Do it all again sam. This is getting tiring.
The Fed and Amin will play it EXACTLY like Lehman Bros. They will take off the QE as we currently know it to see what happens. They will act when the market implodes and unemployment gets >10%. Now is the time to test it b/c it gives Oshamalamadingdong time to recover before fall ’12.
@gsalvi: The Treaty of Paris proved pretty fucking resoundingly that we are not Europe and that the EU collectively can feast itself on a union of dick.
Having said that, America, from its inception, has been about bigger, faster and better. Some will say that there is a certain valor in the discretion associated with austerity. Valor? Discretion? We don’t do that in America. Fuck that pussy shit, plain and simple.
Maybe QE won’t continue forever. Maybe The Fed will have to turn off the spigot. These conditions will only force the market to get better, to get smarter and to get more efficient. Private companies will continue to find a way to earn more and faster. Instead of complaining about bread lines, it’s time to sack up and stop waiting for the government to do our literal and figurative bidding for us.
In the immortal words of the KOD, aka Ricky Rozay, aka Rick Ross:
Mama need a house,
baby need some shoes
Times are gettin’ hard,
guess what I’mma do?
Hustle, hustle, hustle,
hustle, hustle HARD.
Bravo, sir.
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for being in denial? this usually helps, yes.
Fed will do QE3 (sooner or later) regardless of employment numbers. The debt needs to deleverage or inflate. Inflation, though much stupider, is politically easier (until faith is lost in the currency).
You guys are making this all too dificult… you need to start thinking like David Tepper.
If the economy slows down, we QE3 it – Bam higher stock prices, weaker dollar and higher commodities
or
The economy naturally starts growing/expanding – Bam higher stock prices, higher dollar and stable commodities.
Now everyone go buy a house, bulldoze it and build a bigger one.
Case closed.
Agree with that second part, although I think commodities slowly fall.
Well I figure in that scenario, the rising dollar vs the higher commodity demand from the expansion should leave commodity prices somewhere in the middle, thus stable prices.
In the second case, what is the driver? How do debt loads factor in?
http://forecastchart.com/graph-gdp-rate.html
See the chart of GDP for many years? Don’t ask why just acknowledge it keeps growing.
Must be demographic trends. Oops, I mean strong private sector growth from lower future taxes. Oops, I mean far lower interest rates will spur further growth. Oops, I mean domestic industrial capacity will increase due to looser environmental regulation and the strong work ethic of generation now. Oops, I mean productivity will increase through US technology breakthroughs because the number of American enrolments in science and engineering is increasing so much. Oops, I mean less expensive energy and gasoline. Oops, I mean… Call me skeptical of scenario 2.
Debt loads have peaked…sold to you.
QE3 will be done but it will be called something else.
At the very least I think the Fed will roll over the short term treasuries that have matured back into the bond market.
The bottom line is the jig is up and we are fucked. Get ready for an ugly summer.
Thanks for your solutions, Bullish. I am simultaneously buying and bulldozing a house right now, to contribute to the nation’s future prosperity.
Your country thanks you for your contribution.
My poor little dollar is falling fast and heading towards May lows. BTW mainland China is closed for holiday on Monday…bet they get a rate hike, gossip is uber high on that.
Also Random Thought…next week the US has little econ news…but Europe has both the Bank of England and ECB having rate meetings. Australia does too. IMHO there is A LOT of bullishness in all of these that could be slapped silly when they disappoint, like they always do…fwiw
The next step for the Fed is to pump a trillion into the covert plunge protection team and expand their role, but not tell anyone. Besides buying stocks after hours, when they can achieve a nice ramp up, the enhanced PPT will:
– Buy houses
– Create makework jobs
– Give money to bank executives
– Buy more stocks, derivatives, bonds ‘n shit, and IPhones
They’ve been doing this already for two years.
Next is a bailout of Walmart because soon, 50 million plus food stamp recipients will demand it.
QE3 is already happening as the Nymphette will attest.
Only she and I seem to be watching the dollar today.
Anyone notice it’s down under $74 again?
Pump, pump, pump… Bernanke is furiously pumping, seemingly incognizant of the large gaping hole at the other end of the balloon.
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Jake…This is so scary….like Scream 4.
The Clam at least will probably reinvest the proceeds of their expiring funds from its balance sheet back into Treasurys
He is very cognizant of the gape. The excess (interest payments on federal debts) goes straight to the debt-holders (his bosses, who are global central bank shareholders).
qe’s dont mean anything to the unemployment rate,so dismiss that notion. will there be no qe 3 !…….and if unemployment does go higher,( of which,is more higher than the true #’s) interest rates will go nowhere.interest rates and unemployment go hand in hand. interest rates go way down with this type of unemployment in order to spur growth, higher rates are used to keep growth tamed.
i hope we get QE3 so rates wil skyrocket in 2 years and i can buy foreign creditworthy 30 year gov’t bonds at 10% and forget this market in exchange for more worthy endeavours.
Good plan. Unfortunately, the problem may be in the “credit worthiness.”
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most people do not understand that most states have laws prioritizing debt payments. Muni’s are ranked towards top of the heap. They get paid before every other debt. Never heard this discussed on CNBC Muni scare episodes. Pile in on this one.
Meanwhile, the consequences of the Obama Election march on… Your Soliciter General says — there IS a way to escape having the Federal government mandate what you must purchase — just make a lot less money!
File under:
Incredibly, Incredibly Important Shit that No One is Paying Any Attention To.
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Somebody, I think it was Trader Caddy, did a thesis or dissertation in college showing that both political parties were moving to the Left. This didn’t make sense to me until I thought some about how it might be playing out. Since I do not thik either political party has an ideology but only fakes them to try and get a certain section of the voteres to vote for them, I couldn’t figure it out.
But then I realized the following. Since Special Interest Groups control both political parties, they are the ones who determine where the political parties move. The corporations, unions etc. and other entities represented by Special Interest groups have, in a sense, gotten more Leftward, or socialistic over the years. So that would mean the political parties, which are controlled by them, would also have to move to the Left.
Of course the Special Interest Groups do not really have any ideology or concern themselves with such matters in the least. But perhaps in effect they do. The Special Interest Groups have decided that they want to be bailed out of their gambling losses and be Too Big to Fai–, unlike the taxpayer that is funding their bailouts, who is Too Small to Matter. Farmers also want to be subsidized for not growing things. Military Industrial Complex Contractors want to be given large government contracts which cost the taxpayers a bundle– even in cases where military officials state that the particular equipment they make is not needed. And on and on.
So both parties may indeed be leaning more Leftward, as a justification for their behavior of whoring themselves to the big banks and other Special Interest Groups– who all want to be subsidized, bailed out, Too Big to Fail etc.
Wow, I was pretty wordy on that one.
Short summary: Both parties have moved to the Left over the years, because Special Interest Groups have moved them to the Left. Because banks, car companies etc. want to be bailed out , farmers and others want to be subsidized, Fannie Mae and Freddie Mac want to be pumped up with taxpayer dollars, military industrial complex wants government contracts etc.
Every Special Interest Group wants carloads of the taxpayers’ money. If that can be called moving Leftward, then I suppose it has happened.
Any comments over 10 sentances, I don’t read. Could you summarize your summary?
Summary of summary: Every Special Interest Group is demanding– and getting– huge carloads of the taxpayers’ money. If that can be called moving to the Left politically over the years, then I suppose it has happened.
It’s called communism.
Sunlight is starting to break through… now, what you have to ask yourself — what is the solution?
Special Interest Groups (your definition) are only “left” in the sense that they have realized (and harnessed) the power to force other people to do their bidding through the gun of the Federal gov’t.
They are, in other words, just authoritarians of a different stripe. How to combat that?
Dissolve their central base of power.
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I see your point. However, it is more complex than that. Some of the Special Interests’ groups’ excess power is in stealing taxpayers’ money. But some of it is in being allowed to do whatever they want to do, because they have the power to block legislation designed to protect consumers. E.g. the FDA does some stupid things, but it also does some regulation which keeps us from being poisoned by food from industries that may not otherwise follow safe or sanitary standards. And there are legal standards requring people to keep contracts that they have agreed to in writing. And the federal highway system is pretty good. Government does do some things well– or possibly could. I wouldn’t want to throw the baby out with the bathwater.
I don’t know why you love Republicans so much. You sure sound more like a Libertarian to me. Republicans do sometimes pretend to have a Libertarian agenda, so maybe they have convinced you that they really do.
I don’t believe the FDA — or any federal government regulatory agency — is faster than the market or it’s policemen, the courts, in directing proper policy.
Think about it, we are in the information age, now, but even 100 years ago regulatory agencies were followers. The gov’t did not push out child labor laws until all but the fringiest firms had outlawed them internally, for example.
Today, we know about Rep Weiner’s wiener before even the press does, thanks to blogs and Twitter. Do you really think the ponderous central bureaucracy can make better decisions than the knowledge environment — the cloud of experts — that are already out there with money on the line?
They cannot, and the fact is, it’s all a farce to help your “Special Interests” by limiting competition to all but the behemoths.
Sunlight, sunlight, break through! You are almost there! “I am from the Gov’t and I’m here to help” is generally a lie.
Unless you add “special interests” after the help.
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And I don’t “love Republicans so much” I just find that people like Paul Ryan are usually in the Republican camp, and consequently there’s NO ONE I like in the Dem camp.
Sad, isn’t it? Can you give me one good Dem? Anyone? Anyone?
And you have obviously been taught to reflexively hate everything GOP, and yet, your ideas are far closer to theirs than the opposite.
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There have been a few good actions by members of the Dem party and a few good actions by members of the Repub party. Not many good actions by either, which is why I want to see a functional 3rd party to push the other 2 out.
I think that the federal government should be very much shrunk down from what it is today– but not as much as most Libertarians think. I do think there are things that are better done by a federal government than by any other part of society– although not very many.
The President speaking and stocks are falling.
Again !!
you know what people…
The most depressing thing I find is seeing how unhappy/upset/depressed Americans are about the economy and where it’s going. I’ve never seen you people like this. It’s alien to me as I always saw Americans as happy and possessing a sunny outlook on life and where they were going. having lived there for 15 years, it’s what i always loved about the place.
The one time I saw something similar was in Australia in the early 90’s when the stuffing was knocked out of the place as a result of a pretty deep regional depression…. The southern part.
You do come out of it and it does eventually get better.
I love you guys and you need to get back to your sunny disposition. It’s the greatest nation on earth. 🙂
That’s my pep talk. lol
J, you are talking to the wrong Americans… very rosy, happy and optimistic over here.
lol..
J — I was only a kid during the Carter years, but you may remember them better.
I think this is a similar “malaise” no?
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Yea, you’re probably right. It was pretty horrible then too from what i recall reading in Newsweek and Time…
hahahaha there was internets then, so it was pretty much how we got news about what was happening over there.
The younguns won’t believe this as they probably never heard of those two mags, however they were the most influential topical news mags in the country and the world back then. And Newsweek sold for all of a dollar last year.
VIX is getting crushed…Tues prediction still in the game
Here is my thoughts but I will be quick to change my mind especially if we break new highs.
There will be no QE3. The fed is looking at the big picture. They don’t want any government official trying to hold them back with regards to easing. So rather than ease they will make a statement by refusing QE and making the markets crash to try to suppress commodity prices saying “SEE, this is what happens when you don’t give us more power and more authority”. Whether or not the debt ceiling is smoke and mirrors doesn’t matter.
Additionally, politics are heating up as we near an election year and republicans are looking to get elected and the fed doesn’t want Ron Paul and his “end the fed” chants to get any bigger and get in the way from their agenda. My feeling is that this is a little backwards. Although bad economy will be good for republicans, the current commodity fueled inflationary rally will be bad for democrats too. However, the “Ron Paul” types will have a better chance if there is high gas prices and high commodity prices, which the fed will oppose.
Additionally republicans are trying to cut the budget anyways as democrats are trying to raise taxes, either of which could cause a serious decline, and the fed doesn’t want that conflicting with their agenda. It will look bad for them if due to budget cuts there is deflation in spite of QE3. They can argue “it would have been even worse without it” but the public won’t buy it. So after there’s a public outcry and the media gets everyone believing they need to do more, the QE3 will finally happen in 2012 like never before
I don’t know if there gambit will work and maybe the public and politicians will say “QE1 and 2 didn’t work, we aren’t giving you QE3” but that’s what I predict they do
Very well thought out comment– even if it is more than 10 sentences.
3 Sentence Summary of LOL’s comment, for those whose minds can only process short sound bytes:
“The fed.is looking at the big picture… So rather than ease they will make a statement by refusing QE and making the markets crash to try to suppress commodity prices saying “SEE, this is what happens when you don’t give us more power and more authority”
“after there’s a public outcry and the media gets everyone believing they need to do more, the QE3 will finally happen in 2012 like never before.”
Here’s my take (without bothering to read 125+ comments)…
The end of QE2 + Republican refusal to raise the debt limit = US Treasury default = End of America as we know it.
“QE3” (or some other name for it) is a certainty, as are stock market whipsaws.
Well, Alpha, I would only add that some here have said that the end of QE would only be the Temporary End of America as we know it. And in the end we might be better off.
And some have said that the Fed will pretend to end QE, and will let the markets crash until people fall on their knees and begin begging for QE 3.
Default would certainly = war, no?
No.
Yes, I concur that we are only looking at the temporary end of the world. Time to parrrr….TAYYYYYY!!!
As long as the majority of the U.S. electorate refuses to become engaged in the choosing of their leaders via the ballot box, and opts to sit on their ass watching Dancing with the Stars whilst sipping soft drinks and dropping Cheetos behind the couch cushions, expect more of the same.
More QE (or whatever they call it going forward)
Higher prices for everything you need to live on
Zero return on your savings accounts
Continued high unemployment
When it gets bad enough, people will wake up and call for real change. But things will get a lot worse before that occurs.
I dunno, people are starting to get interested. People that vote.
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The only change you can believe in, is a promise of completely brutal and difficult times for a few years, followed by greater prosperity. If anyone tells you different, run away.
It is not possible for US treasury to default only if congress wants to.
QE2 did not work for the real economy plain to see, why would he do QE3
that wasn’t me. The real J
Bear Party Over Here…hangover on Monday, but worth it.
I think you meant “bare”.
Obama’s going to do whatever it takes to get re-elected, which means a short term approach and telling the Clam to extend the QE. A better debate is whether there will be a QE8 or not…
The Fed has to walk a fine line politically between taking effective action, and being taken over by Congress/Executive. The Clam wants to stay independent of the Government as much as possible.
Is it 2 Trillion Dollar questions? or one 2 Trillion dollar question?
I think it’s two trillion DOLLAR questions, at a price of a buck a piece.
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stated before on other post, we may get neg gdp and go into a depression, the facts are becoming clear. unless something happens we r fucked. as long as the genius’s in congress continue to have no clue as to what is going on we will stay on this path to economic collapse
QE 3 or not, we need a strong dollar. What’s the best way to pay huge debt (14+ Trillion)? A currency worth considerably more.
Not if the debt is denominated in that currency it ain’t.
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Which is why I anticipate rate hikes on the way.
Which will of course allow all kinds of central bank owning fuggers to swoop in and buy factories, farms, and fun from everyone at a deep discount as every debt-holder goes belly-up.
It depends… on whether China and India keep buying commodities. It depends on whether Greece, Spain, Italy, Portugal go tits up and it depends on how much the Democrats can bribe the voters in the run up to the election.
But you already knew that… Gold to hit 1650+ within 12months. Silver to follow most equity markets to the shit, USD to get battered, smaller country currencies to appreciate to record levels ie AUS to hit 1.30. The safer money is in mid cap Aussie resource companies.
It depends right now, on whether the Irish and the Greeks bloody some guillotines.
Fly,
Your Thursday afternoon rape call was just a bit early. Friday was the market rape.
The Dude.
I would recomend everyone stop usng their brains and start using their eyes! When ever I think I know what is going to happen next I am ALWAYS wrong.
There is so much BS about this.
Bottom line, you need to cut services (and you can start with the military) and you need to increase taxes.
Quit screwing around and get on it.