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#3236276 - 05/01/13 11:12 AM No end in sight for Fed stimulus
Dodge Man
12 Point


Registered: 10/15/03
Posts: 6366
Loc: Dyersburg, TN

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At a two-day meeting that wraps up on Wednesday, the Fed is widely expected to maintain its monthly purchases of $85 billion in bonds to support an economic recovery that is nearly four years old but still too weak for the job market to truly heal.

Currently, analysts see the Fed buying a total $1 trillion in Treasury and mortgage-backed securities during the ongoing third round of quantitative easing, known as QE3. Until recently, analysts had believed the Fed would start taking the foot off the accelerator in the second half of the year.

Now, things are looking a bit more shaky.

"Expectations for tapering off of the Fed's outcome-based purchases have been pushed back due to recent softening in the economic data," according to a report from the private sector Treasury Borrowing Advisory Committee, released on Wednesday.

http://finance.yahoo.com/news/no-end-sight-fed-stimulus-040556215.html
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#3236538 - 05/01/13 06:05 PM Re: No end in sight for Fed stimulus [Re: Dodge Man]
OHVATN
4 Point


Registered: 10/09/12
Posts: 398
Loc: Middle TN

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It can't be unwound. Once they remove the punch bowl, interest rates (and cost of fed.gov financing) will sky rocket. Stock market and bond yields, both of which are correlated with continuing QE, will crash and explode, respectfully. They have really painted themselves into a corner (aka credibility trap). They (Fed) and we won't be saved by DC either because Congress/White House and the two party system is utterly dysfunctional and incapable of meaningful fiscal and tax reform all because of electoral politics and gamesmanship.
_________________________
"Democracy is the theory that the common people know what they want and deserve to get it good and hard." H. L. Mencken

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#3236592 - 05/01/13 07:05 PM Re: No end in sight for Fed stimulus [Re: OHVATN]
FLTENNHUNTER1
16 Point


Registered: 11/21/07
Posts: 16574
Loc: Tampa FL

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Got Gold?
_________________________
"The fore horse of this frightful team is public debt. Taxation follow that, and in its turn wretchedness and oppression."
--Thomas Jefferson
18 Trillion http://www.usdebtclock.org/

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#3236627 - 05/01/13 07:45 PM Re: No end in sight for Fed stimulus [Re: FLTENNHUNTER1]
Crappie Luck Moderator
Non-Typical


Registered: 01/29/03
Posts: 62020
Loc: Smith Co.

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Financial Collapse - Is Bernanke Preparing To Jump Ship?


Financial Collapse - Is Bernanke Preparing To Jump Ship?

Interest-Rates / US Interest Rates
May 01, 2013 - 06:30 PM GMT
By: Graham Summers

The Fed meets today and tomorrow. The ECB meets on Thursday. Those will be the defining market forces for the next three trading sessions.

There is little if any point in trying to trade this week (at least until Thursday). The Fed is notorious for leaking info to the well-connected. The most recent “accidental” sending of a report a day early is just the latest example.

In simple terms, the market will be even more of an insider’s game today and tomorrow than usual. No point trying to open a new position in that window.

However, against this backdrop the big picture for the markets is growing worse and worse.

The US is almost assuredly back in recessionary territory. This is coming on the back of the weakest recovery (if you can call it that) in post-WWII history.

The Feds hide this economic nightmare by simply not counting those who are unemployed (lower the denominator in the fraction and your unemployment ratio falls), and by using bogus deflators in their GDP growth numbers (the current CPI is 2.1%… but the Feds calculated the first quarter GDP growth numbers use an inflationary measure of 1.2%).

Change your measurements and BOOM you’ve got a recovery. It works if you’re a Government bean counter trying to keep your job. It doesn’t work so well for everyone else.

However, there are clear signs we’re heading back into recessionary territory. I think the first quarter 2013 GDP growth print is the best we’ll see all year. And it’s very possibly things will get ugly before the year ends.

Speaking of which…

Ben Bernanke has announced he won’t be attending this year’s Jackson Hole meeting. A Jackson Hole meeting without the Fed Chairman is like having a performance of Hamlet without Hamlet himself in it. Why would the single most important Central Banker not attend one of the biggest economic meetings of the year?

He claims it’s due to scheduling conflicts. As if he didn’t know about this meeting in advance.

The fact is Bernanke is likely going to step down at the end of this term in January 2014… which means the markets will be losing one of their biggest props, the famed Bernanke Put.

God help whoever fills the role in the future. Assuming things hold together until next year (a BIG assumption) the new Fed Chairman will be inheriting one of the worst messes in history.

Investors take note, the markets are sending multiple signals that things are not going well in the world. Companies based on the real economy are dropping hard.

I’ve been warning that we were heading for a dark period in the markets. I’ve outlined precisely how this will play out as well as which investments will profit from another bout of Deflation.

As I write this, all of them are SOARING.

http://www.marketoracle.co.uk/Article40237.html
_________________________
"To find out who your real rulers are, simply look to those whom you CANNOT criticize..."
--Voltaire

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#3236709 - 05/01/13 08:48 PM Re: No end in sight for Fed stimulus [Re: Crappie Luck]
Stalkhunter
10 Point


Registered: 07/17/11
Posts: 4404
Loc: Knoxville TN

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QE 3 was put there for this purpose to crash this country. When the private bank owners of the Fed Reserve tell them to pull the plug. They will have achieved what they wanted.

THE Down Fall Of This Country.
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Semper Fi (USMC 1981-1991)
Molon Labe
I am a cancer Killer.

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#3236711 - 05/01/13 08:49 PM Re: No end in sight for Fed stimulus [Re: Stalkhunter]
Stalkhunter
10 Point


Registered: 07/17/11
Posts: 4404
Loc: Knoxville TN

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Then they will hit our bank accounts and retirerment accounts.
_________________________
Semper Fi (USMC 1981-1991)
Molon Labe
I am a cancer Killer.

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#3236803 - 05/01/13 10:21 PM Re: No end in sight for Fed stimulus [Re: Stalkhunter]
OHVATN
4 Point


Registered: 10/09/12
Posts: 398
Loc: Middle TN

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The Fed has been funding the fed.gov by buying most of each month's Treasury issuance and taking onto its balance sheet (and off its owners' balance sheets) MBS. By buying Treasuries, the Fed is keeping interest rates down and trying to boost aggregate demand prarily by trying to blow another housing bubble. I think the problem is the banks still have a lot of bad debt on their books and are just keeping the Fed funds (from MBS purchases) in their excess reserves. The banks know that they would violate capital requirements and be technically insolvent if they lent out the funds. Instead the banks prefer to get 0.5% return from the Fed on their excess reserves and using them to speculate in the stock market. In the meantime there's a catch 22. The banks are also not lending because economic growth is mediocre at best and the true employment situation is abysmal with a labor participation rate at 1979 levels.

From Wednesday's Fed minutes they are pointing the finger and blame at Congress. Bernanke is stepping down and a new Fes chairman(woman) will be left to hold the bag. I see three outcomes possible. 1 they succeed in creating growth and all this money printed by the Fed now moves into the broader economy and that will be highly inflationary. 2 they fail to spur growth and the market repeats 2008 and a deflationary collapse but the Fed is out of bullets to fight it. 3 (possibly following 2 or 1) China (in spite of its pro lens) is projected to surpass the US as the largest economy. Given their bilateral trade agreements already trading outside the dollar system and the general concern and anger of China Nd the BRICs at what the Fed has been doing (ie, starting a currency war at worst or competitive currency devaluation at beast) there will be a move to a new reserve currency regime. This will lead (must lead) to US dollar repudiation and collapse (ie, oil no longer priced in dollars) and that will be hyperinflationary.

Nothing good is going to come of this. We are trapped.
_________________________
"Democracy is the theory that the common people know what they want and deserve to get it good and hard." H. L. Mencken

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