Qe 3??

[Wry Catcher]

Wiemar Republic, anyone?

Hoping for a repeat of the Reichstag fire of 1933 and the rise to power of a new type of 'conservatives' Odd-dude? Knowing you're an extremist I'm not surprised. A champion of liberty for the few, camps for the rest?

 

[Trajan]

Crappy ADP jobs report. ISM numbers around the world poor. Housing prices declining again. Maybe QE3 is back on the table.

do I get a rep for my prognostication?


anyway, I'd say its a surety......as a follow up to zero hedge;

China Has Divested 97 Percent of Its Holdings in U.S. Treasury Bills
Friday, June 03, 2011

snip-
Prior to the fall of 2008, according to Treasury Department data, Chinese ownership of short-term Treasury bills was modest, standing at only $19.8 billion in August of that year. But when President George W. Bush signed legislation to authorize a $700-billion bailout of the U.S. financial industry in October 2008 and President Barack Obama signed a $787-billion economic stimulus law in February 2009, Chinese ownership of short-term U.S. Treasury bills skyrocketed.

snip-

At the end of March 2011, by which time the Chinese had dropped their Treasury bill holdings 97 percent from their peak, the publicly marketable segment of the U.S. national debt had almost doubled from August 2008, hitting $9.11 trillion. Of that $9.11 trillion, $5.8 trillion was in intermediate-term Treasury notes, $1.7 trillion was in short-term Treasury bills; $931.5 billion was in long-term Treasury bonds, and $640.7 billion was in TIPS.

Before the end of March 2012, the Treasury must redeem all of the $1.7 trillion in Treasury bills that were extant as of March 2011 and find new or old buyers who will continue to invest in U.S. debt. But, for now, the Chinese at least do not appear to be bullish customers of short-term U.S. debt.

China Has Divested 97 Percent of Its Holdings in U.S. Treasury Bills | CNSnews.com

 

[Trajan]

I watched john T. via Zero hedge back in sept 10 and feb.11 he had it all dead on.....I think he is wrong on QE3 though, and ZH is right.

Politically it will be the only card they have left and they just want to get past the next election SO they will go throttle up in Sept for QE3, if they can shove some money at the system while we reduce spending it may equalize just long enough for obama to get reelected that is IF you think he could get reelected with the numbers he has right now, because they will not have moved very far.


the video is must watch.......

Investing Beyond US Dollar
Thu 02 Jun 11 | 08:20 AM ET

http://video.cnbc.com/gallery/?video=3000025349



I wish I knew how to embed video here..

 

[Wiseacre]

Well, here's a question, the more money Bernanke pumps into the economy the greater the risks for inflation at some point down the road. So, will he risk his reputation as the Fed Chairman for a QE3 that may not work any better than QE2 did? Even if Obama wants it? Some prices are going up, it is said that inflation as it was measured under Carter would be at or over 10% today.

 

[iamwhatiseem]

I watched john T. via Zero hedge back in sept 10 and feb.11 he had it all dead on.....I think he is wrong on QE3 though, and ZH is right.

Politically it will be the only card they have left and they just want to get past the next election SO they will go throttle up in Sept for QE3, if they can shove some money at the system while we reduce spending it may equalize just long enough for obama to get reelected that is IF you think he could get reelected with the numbers he has right now, because they will not have moved very far.


the video is must watch.......

Investing Beyond US Dollar
Thu 02 Jun 11 | 08:20 AM ET

Investing Beyond US Dollar - CNBC



I wish I knew how to embed video here..

I agree.
Obama does not have the guts or the will to do the right thing. The White House and the Dems will push hard behind the scenes to get just enough QE3 to push the economy up just enough, and early enough to be ables to say "it is working".

ALL politicians - ALL...have no problem hurting the country to get elected. ALL

 

[Toro]

My favourite index of coincident and leading economic indicators is saying that the economy has slipped back into recession.

Having said that, I'm still skeptical that there will be a QE3, though of course I could be wrong on that. I think there is little political appetite for it.

 

[iamwhatiseem]

My favourite index of coincident and leading economic indicators is saying that the economy has slipped back into recession.

Having said that, I'm still skeptical that there will be a QE3, though of course I could be wrong on that. I think there is little political appetite for it.

I don't think there is stomach to do this within the FED. Alot of FED folks went along with QE2...but would be hard-pressed to entertain another due to VERY serious inflationary threats.

As for the White House and the legislative critters...depends. I am wholly with you - all indicators I pay attention too are truly lousy. If it gets worse than we think, then it might be easy enough for the Obama admin and the Dems to scare enough people into believing there "is no choice".
I will never underestimate the irresponsibility and the willingness of politicians to do the wrong thing if it improves the odds of getting elected. Hell, it is what they do on a daily basis.

 

[william the wie]

Crappy ADP jobs report. ISM numbers around the world poor. Housing prices declining again. Maybe QE3 is back on the table.

Perhaps, but the decline in effectiveness from 1 to 2 has been swagged at around 70%. If that is a compound interest function then QE III will clock in at about 9% of QE I effectiveness. That will create a lot of selling pressure in treasuries.

 

[william the wie]

Well, here's a question, the more money Bernanke pumps into the economy the greater the risks for inflation at some point down the road. So, will he risk his reputation as the Fed Chairman for a QE3 that may not work any better than QE2 did? Even if Obama wants it? Some prices are going up, it is said that inflation as it was measured under Carter would be at or over 10% today.

Inflation is high enough now that an anti-D tidal wave will happen in 2012, the big question is the percentage of anti-D non-presidential black votes in 2012. Obama and the Ds take black votes for granted to the point of courting openly anti-black hispanic voters. Mallate is not a big improvement over ******. If Obama ignores or poo-poos that crap in the campaign in order to get the hispanic vote the Democrats will lose a lot of safe districts.

 

[Toro]

The Bernank didn't sound like he was about to embark on QE3 yesterday.

 

[Trajan]

The Bernank didn't sound like he was about to embark on QE3 yesterday.

true. I think this is a political issue in that he has to keep that card in his hand as long as possible, because, when he does play it there will be a hue and cry and obama will take the heat, most especially if we hear of it before the budget for 12, the debt ceiling and deficit issues are somehow defused. IF he plays it there after Obama can always say we took care of the financials, we just need this to tide us over ( which is more BS) but it will give him cover .....

Look, we are in uncharted territory here; Europe as a whole is soft, article in wsj today confirms chinas housing is most definitely going over the edge as we speak and who knows how far that rabbit hole goes.

Look at the buy cycles over QE 1& 2, notice that as QE 1 tailed off into QE 2 who backed out of the market and how and to what extent they were replaced;

It not so much who will buy; but at what price, at a high enough rate we will always find buyers....(hopefully, maybe?)

Since 'money' creation- i.e. debt issuance actually comes first and the 'sale' later and we have for 2 years issued debt based on phantom net productivity as the economy has not moved, now what?

 

[Toro]

I'm not sure if QE3 will do anything. There are over $1 trillion of excess reserves sitting on the banks balance sheets. THAT is the high powered money that will get the economy going. I'm not sure if adding even more reserves to a mountain of idle reserves already will do anything.

 

[william the wie]

The other term for this is the Keynesian endpoint. The economic policy assumptions of every school include a lot of slightly not-so simplifications mostly based on the statistical error of treating large numbers of integers as a continuous function and ignoring the compounding of rounding errors in the measure of continuous functions. As I understand it, which may very well be a highly dubious assumption, everything works in smooth laminar flow until the transition to turbulence at which point everything goes to hell and nothing works. This is the endpoint where nothing works.

 

[Liberty]

if qe3 happens im sellling EVERYTHING i own, car, electronics, clothes, EVERYTHING! and buying gold...NO DOUBT!

 

[Trajan]

The other term for this is the Keynesian endpoint. The economic policy assumptions of every school include a lot of slightly not-so simplifications mostly based on the statistical error of treating large numbers of integers as a continuous function and ignoring the compounding of rounding errors in the measure of continuous functions. As I understand it, which may very well be a highly dubious assumption, everything works in smooth laminar flow until the transition to turbulence at which point everything goes to hell and nothing works. This is the endpoint where nothing works.

damn William, say that 3 times fast please...

 

[Trajan]

anyway

the black swan has his take....



Is The Debt Problem As Bad As They Say



On the rare occasion that I’m bored, I like to watch 24-hour news television for entertainment. It’s hilarious watching the talking heads spin out of control in apoplectic fits when they’re essentially arguing the same point; they might be from different parties, but they’re merely battling over small details of the same government-sponsored solution.

Recently I caught one of these talking head financial experts on TV arguing about debt levels in the United States. He was saying that the US debt doesn’t matter all that much because the US government has so many assets to offset its debt.

For example, he suggested that things like the highway system, national parks, and strategic petroleum reserve would more than offset America’s liabilities, so the looming national debt isn’t such a big deal after all.

He couldn’t have been more wrong.

The Government Accounting Office (GAO) puts out an annual financial report that looks and feels like corporate financial statements… of course, the US government doesn’t have to abide by the same accounting principles as the private sector, so they get to cheat quite a bit in overstating their position.

The most recent report is signed off by Tim Geithner and includes oodles of newspeak from the Ministry of Plenty about how dazzling their economic recovery measures have been. Needless to say, the numbers paint a different picture.

Even when you add up -all- of the assets, right down to every desk, chair, and lifeguard stand, and even if you throw in a healthy boost to the asset column to account for premiums in the market value for land and “gold” in Fort Knox, the government is still in the hole to the tune of over $10 trillion. It would take more than 300,000 years to count that high.

And yet, the fake recovery is vanishing, the dollar keeps falling against anything of real value, and the average guy on the street is realizing limited benefit for his share of the debt and inflation burdens. How is this possible?

I’ve often said that bureaucrats and politicians have an extremely limited playbook consisting of taxation, regulation, and inflation. These three ugly sisters of bureaucracy effectively serve to steal from people, make things more difficult for them, and rob them of their purchasing power… and yet they’re dressed up as solutions instead of problems.

Consider the case of Illinois– the state is completely insolvent and running out of cash quickly. It doesn’t have the luxury of printing its own currency, and is thus being forced to deal with its fiscal reality… much like Greece.

Rather than trying to make their state more competitive in order to attract talent and capital, they’ve opted for the old playbook… starting with taxes. Specifically, Illinois lawmakers have targeted companies like Amazon, arguing that online transactions through the company’s Illinois-based affiliates are within the state’s sales tax jurisdiction.

For Amazon, the calculus involved is totally objective– once the Illinois legislature passed this legislation, the cost of doing business in the state exceeded the benefit, and Amazon cut all ties to its Illinois affiliates.

Thousands of people across the state who used to earn a portion of their living as an Amazon affiliate were stripped of their income thanks to do good lawmakers trying to squeeze a little more dough out of a productive company.

Peoria, Illinois based Caterpillar Inc. is in a similar position, now threatening to leave Illinois because the politicians keep raising income taxes. Now the financial powerhouse CME Group is echoing this sentiment. The impact this would have to the state economy is devastating.

These steps that Illinois lawmakers are taking, along with their destructive consequences, are reflective of what will happen when the federal government is finally forced to deal with its own fiscal reality.

$10 trillion in the hole and facing a steep downward trend, the US government is either looking at substantially higher borrowing costs, substantially higher inflation, or both. Investors are getting jittery about loaning money to the United States, so they will either demand a higher return, or the Federal Reserve will hyperinflate the currency to mop it all up.

Regardless of the scenario, Congress will reach deep into this playbook until they chase away every productive citizen and company they can… In fact, it’s already happening.

The number of people renouncing US citizenship has been more than doubling year-over-year for the last several years. Meanwhile, many businesses are moving overseas, or at least focusing on international operations and shifting profits offshore.

It’s easy for companies to move… much more difficult for people who have emotional ties, fear, anxiety, etc. that maintains their geographical inertia. As such, it will ultimately be the individual citizens remaining behind who will be exploited like malnourished milk cows to pay for the destruction.

In the coming days, I’d like to tell you a lot more about how I see this playing out. Stay tuned.

 

[william the wie]

Hey Trajan do you prefer uh-oh moment?

 

[Trajan]

Hey Trajan do you prefer uh-oh moment?

no, guess not...

 

[Trajan]

well, and off into the sunset goes QE2....1.73 Trillion, ostensibly to prop the housing market and other sundry spending......

so, what benefits can we mark as to QE 2?




Fed Will Buy $50 Billion of Treasurys in Final QE2 Push
Published: Friday, 10 Jun 2011

The flood of Federal Reserve money that has supported Wall Street and the rest of the U.S. economy for two and a half years will shrink to a trickle with the conclusion of the Fed's bond purchases announced Friday.

The Fed said it will buy $50 billion of Treasurys, the final series of government bond purchases that marks the last phase of the $600 billion program it launched in November 2010 to prevent another recession.

As a result, once the purchases are concluded June 30, the financial sector will receive only a fraction of the roughly $100 billion a month in easy money it has been getting from the Fed.

The conclusion of the Fed's bond-buying program, known as "Quantitative Easing 2," does not mean the stimulus will come to a complete stop. The Fed will reinvest maturing securities, mainly mortgage-related debt, which analysts predict will run at $12 billion to $16 billion per month.

News Headlines

 

[LordBrownTrout]

anyway

the black swan has his take....



Is The Debt Problem As Bad As They Say



On the rare occasion that I’m bored, I like to watch 24-hour news television for entertainment. It’s hilarious watching the talking heads spin out of control in apoplectic fits when they’re essentially arguing the same point; they might be from different parties, but they’re merely battling over small details of the same government-sponsored solution.

Recently I caught one of these talking head financial experts on TV arguing about debt levels in the United States. He was saying that the US debt doesn’t matter all that much because the US government has so many assets to offset its debt.

For example, he suggested that things like the highway system, national parks, and strategic petroleum reserve would more than offset America’s liabilities, so the looming national debt isn’t such a big deal after all.

He couldn’t have been more wrong.

The Government Accounting Office (GAO) puts out an annual financial report that looks and feels like corporate financial statements… of course, the US government doesn’t have to abide by the same accounting principles as the private sector, so they get to cheat quite a bit in overstating their position.

The most recent report is signed off by Tim Geithner and includes oodles of newspeak from the Ministry of Plenty about how dazzling their economic recovery measures have been. Needless to say, the numbers paint a different picture.

Even when you add up -all- of the assets, right down to every desk, chair, and lifeguard stand, and even if you throw in a healthy boost to the asset column to account for premiums in the market value for land and “gold” in Fort Knox, the government is still in the hole to the tune of over $10 trillion. It would take more than 300,000 years to count that high.

And yet, the fake recovery is vanishing, the dollar keeps falling against anything of real value, and the average guy on the street is realizing limited benefit for his share of the debt and inflation burdens. How is this possible?

I’ve often said that bureaucrats and politicians have an extremely limited playbook consisting of taxation, regulation, and inflation. These three ugly sisters of bureaucracy effectively serve to steal from people, make things more difficult for them, and rob them of their purchasing power… and yet they’re dressed up as solutions instead of problems.

Consider the case of Illinois– the state is completely insolvent and running out of cash quickly. It doesn’t have the luxury of printing its own currency, and is thus being forced to deal with its fiscal reality… much like Greece.

Rather than trying to make their state more competitive in order to attract talent and capital, they’ve opted for the old playbook… starting with taxes. Specifically, Illinois lawmakers have targeted companies like Amazon, arguing that online transactions through the company’s Illinois-based affiliates are within the state’s sales tax jurisdiction.

For Amazon, the calculus involved is totally objective– once the Illinois legislature passed this legislation, the cost of doing business in the state exceeded the benefit, and Amazon cut all ties to its Illinois affiliates.

Thousands of people across the state who used to earn a portion of their living as an Amazon affiliate were stripped of their income thanks to do good lawmakers trying to squeeze a little more dough out of a productive company.

Peoria, Illinois based Caterpillar Inc. is in a similar position, now threatening to leave Illinois because the politicians keep raising income taxes. Now the financial powerhouse CME Group is echoing this sentiment. The impact this would have to the state economy is devastating.

These steps that Illinois lawmakers are taking, along with their destructive consequences, are reflective of what will happen when the federal government is finally forced to deal with its own fiscal reality.

$10 trillion in the hole and facing a steep downward trend, the US government is either looking at substantially higher borrowing costs, substantially higher inflation, or both. Investors are getting jittery about loaning money to the United States, so they will either demand a higher return, or the Federal Reserve will hyperinflate the currency to mop it all up.

Regardless of the scenario, Congress will reach deep into this playbook until they chase away every productive citizen and company they can… In fact, it’s already happening.

The number of people renouncing US citizenship has been more than doubling year-over-year for the last several years. Meanwhile, many businesses are moving overseas, or at least focusing on international operations and shifting profits offshore.

It’s easy for companies to move… much more difficult for people who have emotional ties, fear, anxiety, etc. that maintains their geographical inertia. As such, it will ultimately be the individual citizens remaining behind who will be exploited like malnourished milk cows to pay for the destruction.

In the coming days, I’d like to tell you a lot more about how I see this playing out. Stay tuned.

I think you hit on a good point, Trajan......"and the average guy on the street is realizing limited benefit for his share of the debt and inflation burdens. How is this possible?

I'd go a bit further and say that the average guy hasn't realized anything other than his debt sheet to the government is more than he/she will ever be able to pay back in two lifetimes.