You can understand WHY the markets are on the defensive. The possibility of a Euro-bank run is very real, as it was late last year before they found $1.3 trillion.
This week the fears are justified but EVERYONE KNOWS that Bernanke MUST come to the RESCUE of Europe during tomorrows PR-fest. If not, then expect SPX 1310 to be tested in short order. If Big Ben whips it out, then a test of 1400 is in the offing. But it’s all just a band aid.
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If Big Ben whips it out and the QE junkies get what they want, we’ll see all time highs within 6 months and high enough oil to sink us back into recession.
If not, I’m sure we’ll get a summer panic at which point Ben will actually start saying he’s considering printing. Then we can go through this whole song and dance for another year with Ben explicitly saying he’ll print but not actually printing. Then just when markets are going to give up again during next summer’s panic, he’ll actually print and we’ll run to all time highs. And oil will get high enough to sink us back into recession.
It all ends the same. I would prefer getting it over with as soon as possible. This song and dance is getting old.
jeez, I’m getting confused…
I mean, in theory if Ben can hold things together long enough, consumers could deleverage themselves and get the system back on track. Throw in some rising wages and the system would normalize. Government debt/GDP would end probably back at around 80-90%.
The problem is, none of those things is happening.
Massive QE with no inflation means we are all getting poorer. But it doesn’t show in the statistics.
no qe. and ben doesn’t need to print.already too much 401k money out there from the last 5 years in circulation just from loses alone. dollar is gonna kick ass when the euro dies,and it will die.
this could be the opportunity for Ben to lighten up his balance sheet as Euro craps the bed adn US Tsy catches a bid.
Questions is if he used the proceeds to create further stimulus whilst selling positions at a profit, woudl this be considered a sterilized QE, or am I reaching here (no homo i.e. no reach around)?