exactly. it's wishful thinking that everything will be ok as long as the wolf is kept from the door for the next 6 months.
but all those short term months (and additional debt) add up making it even more difficult to recover in the long term because of the future burden of that debt and unreformed economies (because they believe that a return to reckless credit and consumer spending is somehow viable).
QE3?
An important point (from http://www.bbc.co.uk/news/uk-19507180):
'But this is not the same as Quantitative Easing: the ECB does not print money to do it, or rather it does but then it takes an equivalent amount of money out of the eurozone economy from other sources. This is so that it does not effectively become a stimulus package paid for by devaluing the currency and the creditworthiness of Germany, Finland etc. The term is "sterilisation".'
So who is underwriting what may be effectively the biggest loan in history?
Jeff
'But this is not the same as Quantitative Easing: the ECB does not print money to do it, or rather it does but then it takes an equivalent amount of money out of the eurozone economy from other sources. This is so that it does not effectively become a stimulus package paid for by devaluing the currency and the creditworthiness of Germany, Finland etc. The term is "sterilisation".'
So who is underwriting what may be effectively the biggest loan in history?
Jeff
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superfrank
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Jeff,
I don't know what Mason means by that, but the money is not coming from "other sources" initially - as with LTRO, it's funny money.
The theory, as with QE in the US and UK, is that the bonds will ultimately be sold back to the market - but imo that will never happen. e.g. if the BoE tried to sell the UK govt bonds it has "bought" back to the market the yield would have to reflect the true credit (default) risk of the UK (without QE) which would mean the yield doubling/trebling.
I don't know what Mason means by that, but the money is not coming from "other sources" initially - as with LTRO, it's funny money.
The theory, as with QE in the US and UK, is that the bonds will ultimately be sold back to the market - but imo that will never happen. e.g. if the BoE tried to sell the UK govt bonds it has "bought" back to the market the yield would have to reflect the true credit (default) risk of the UK (without QE) which would mean the yield doubling/trebling.
Interesting thoughts on QE from Marc Faber at 24:30 at http://www.youtube.com/watch?feature=pl ... WI2OPcabtk
Jeff
Jeff
Buffett’s Favorite Valuation Metric Surges Over the 100% Level
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Folly of the Fed: Why Janet Yellen May Be a Dangerous Choice
http://www.pbs.org/newshour/businessdes ... t-yel.html
Janet Yellen, President Barack Obama's nominee to replace Ben Bernanke as the chair of the Fed, was on the hot seat Thursday in front of the Senate Banking Committee for her confirmation hearing. British economist Andrew Smithers questions the monetary policy she's supported as vice chair of the Fed and defended at her confirmation hearing. You can watch the hearing here.
http://www.pbs.org/newshour/businessdes ... t-yel.html
Janet Yellen, President Barack Obama's nominee to replace Ben Bernanke as the chair of the Fed, was on the hot seat Thursday in front of the Senate Banking Committee for her confirmation hearing. British economist Andrew Smithers questions the monetary policy she's supported as vice chair of the Fed and defended at her confirmation hearing. You can watch the hearing here.
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superfrank
- Posts: 2762
- Joined: Fri Aug 14, 2009 8:28 pm
sound article.Euler wrote:THE TAPER: Recalibrating Liquidity
http://www.richardduncaneconomics.com/t ... liquidity/
the problem is that they're trying to eliminate the business/economic cycle by manipulating market liquidity, and they won't be able to stop now they've had "success" in pumping asset prices.
what happens in future when there's a downturn? yep, more printing, more promises of zero rates forever. meanwhile govts will still be adding to massive national debts while their economies remain unbalanced.
it's hard to see a good ending to any of this.
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superfrank
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- Joined: Fri Aug 14, 2009 8:28 pm
interesting to see what's happening in the markets post taper... printing $65Bn a month is seemingly not enough to keep the debt bubble inflated.
i'm expecting a halt to/reverse of tapering before too long if we don't get another big rally. we'll know when it's coming because markets will start rising on bad news and falling on good news once again.
imho printing and zirp and tarp etc. have only bought more time - nothing has been fixed.
i'm expecting a halt to/reverse of tapering before too long if we don't get another big rally. we'll know when it's coming because markets will start rising on bad news and falling on good news once again.
imho printing and zirp and tarp etc. have only bought more time - nothing has been fixed.