Comments for FOMC: Buy $300 Billion in Long Term Treasuries, More MBS
Nemo says:
Well it's good the Fed is buying them since noboy else wants to.
Nemo Wed Mar 18 13:20:06 2009 CDT #
Dust Bowling for Dollars says:
That oughta fix it.
Dust Bowling for Dollars Wed Mar 18 13:20:11 2009 CDT #
kahni says:
I can see why the market would like this...
kahni Wed Mar 18 13:20:33 2009 CDT #
ac says:
Yay! Nothing like more monetary easing and market manipulation to fix the problems created by monetary easing and market manipulation!
ac Wed Mar 18 13:21:11 2009 CDT #
Cinco-X says:
Hair of the dog ;)
Parent Post
Cinco-X Wed Mar 18 13:59:06 2009 CDT #
Lifeguard1999 says:
Printing money will not solve anything.
Lifeguard1999 Wed Mar 18 13:21:13 2009 CDT #
Wampeter of My Karass says:
"Printing money will not solve anything."
Of course not. The only real solution to massive government spending, is, umm, to reduce the size of government.
Since that will NEVER happen, the only alternative is to paper over the problem. Literally.
Parent Post
Wampeter of My Karass Wed Mar 18 14:02:06 2009 CDT #
MS says:
Predictable? Certainly.....however they've already been buying notes.....this is just the confirmation of it.
Asset inflation here we come...
Ciao
MS
MS Wed Mar 18 13:22:12 2009 CDT #
ac says:
BTW at this point anyone who argues that we have free markets in this country has no credibility.
The claim is patently false and intellectually dishonest in the extreme.
ac Wed Mar 18 13:22:29 2009 CDT #
triplec says:
I am totally against mortgage bailout. I believe it penalizes people like me who live in a 900 sq. ft. house and unnecessarily distributes my taxes to folks who live in 3000 sq ft homes. That being said when I heard Summers real time on Sunday my heart sank and I was sad for the rest of the day. Can someone explain? How is it that the administration can't break AIG bonus contracts, but they think they can modify existing mortgage contracts with the housing bailout?
triplec Wed Mar 18 13:23:25 2009 CDT #
CRbot says:
This comment thread has been HALO-IZED by CRbot.
http://realize.org/cr/halokit.php?halourl=http://www.haloscan.com/comments/calculatedrisk/792290047276256072
CRbot Wed Mar 18 13:23:35 2009 CDT #
Haha says:
Lookie that dollar drop! No wonder gold was taken down earlier.
Haha Wed Mar 18 13:24:14 2009 CDT #
Kung Fu Panda says:
Glad I hung onto those Sun Micro shares...looks like I'll be an IBM shareholder soon. I'm still underwater from my original purchase price though.
Kung Fu Panda Wed Mar 18 13:24:24 2009 CDT #
debtinator says:
IBM is going the way of Unisys: a slow,painful, irrelevant death. Management is clueless. Geezers that think IBM means "safe choice" are rapidly retiring. x86-64 killed sun as surely as 386 killed IBM. IBM doesn't make a thing that you want; nor does Sun.
Parent Post
debtinator Wed Mar 18 13:30:19 2009 CDT #
dk says:
As they say now - No one was ever promoted for buying IBM.
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dk Wed Mar 18 14:24:47 2009 CDT #
MrM says:
What will Wen say?
MrM Wed Mar 18 13:25:00 2009 CDT #
Nemo says:
Stocks up. Gold up.
My personal level of fear way up.
Nemo Wed Mar 18 13:25:18 2009 CDT #
CRbot says:
The Latest from Jesse:
The Fed's Decision
CRbot Wed Mar 18 13:26:30 2009 CDT #
Dust Bowling for Dollars says:
It's so simple - suspend M2M, reinstate uptick, forced reinflation through quantitative easing. Back to the bubble!
Dust Bowling for Dollars Wed Mar 18 13:26:42 2009 CDT #
Comrade-Dope jg (jg) says:
I'm with MrM; hey, Ben, you schmuck; what do you tell your Chinese masters, now?
Comrade-Dope jg (jg) Wed Mar 18 13:26:57 2009 CDT #
Calculated Risk says:
triplec, the mortgage bailout is voluntary - they aren't breaking contracts. The only proposal to break mortgage contracts is the cramdown in bankruptcy (not passed yet), and that follows existing - contracts can be broken in bankruptcy.
All, this is a huge move. Announcing the buying of longer term treasuries has had a huge impact.
This will push mortgage rates down significantly too.
best to all.
Calculated Risk Wed Mar 18 13:27:01 2009 CDT #
Willy Wonka says:
Head for orbit Charlie!
Willy Wonka Wed Mar 18 13:27:37 2009 CDT #
Basel Too says:
My personal level of fear way up.
i know how you feel. Don't know how much more my heart can take. especially with exams coming up :(
Basel Too Wed Mar 18 13:28:01 2009 CDT #
crispy and cole says:
Thread Music:
http://www.youtube.com/watch?v=-58-36lSqG4
crispy and cole Wed Mar 18 13:28:26 2009 CDT #
bfatz says:
Oil going green in 5,4,3,2....
bfatz Wed Mar 18 13:28:47 2009 CDT #
Comrade Elmo Fudd says:
more liquidity kids
Comrade Elmo Fudd Wed Mar 18 13:28:51 2009 CDT #
iceman says:
Print, print, print....
iceman Wed Mar 18 13:29:15 2009 CDT #
poic.v20 says:
Very glad I'm moving assets out of the US.
poic.v20 Wed Mar 18 13:29:20 2009 CDT #
bfatz says:
Look at Gold!!!
bfatz Wed Mar 18 13:29:49 2009 CDT #
RockyR says:
"Look at Gold!!!"
According to Bloomberg, Gold is way down (???). Have anything less delayed?
Parent Post
RockyR Wed Mar 18 13:34:23 2009 CDT #
Apprentice says:
FED might as well buy up all the stocks too. Then we can have one last end of the feckin world binge.
Party on Dudes!
Gitttttteup you Boyahhh Momo cowboys =-X
To shorts: say ten "going forwards" and short no more
Apprentice Wed Mar 18 13:30:13 2009 CDT #
Guest says:
Dice has been rolled. Even though I think they are wrong I hope they are correct for all our sakes.
Guest Wed Mar 18 13:30:20 2009 CDT #
blah says:
I guess the world doesn't trust in the dollar anymore. I don't think God ever did either.
blah Wed Mar 18 13:30:51 2009 CDT #
Mr. Beach says:
These geniuses have now opened a portal to the dark side. Just print $300 billion. And then another $300. And then another. And then another.
Print to prosperity.
Mr. Beach Wed Mar 18 13:31:04 2009 CDT #
Cinco-X says:
Look on the bright side. Hyper-inflation really screws all of the hosers that ripped everyone off. Too bad it REALLY screws those on fixed incomes.
Parent Post
Cinco-X Wed Mar 18 14:02:35 2009 CDT #
traderwalt says:
Treasury bond futures are up 8 handles!
traderwalt Wed Mar 18 13:31:27 2009 CDT #
cold realities of competition says:
From prior thread (seems more on topic here...)
I am still trying to understand "monetization." Does this mean the FED just printed $300B? Or is there a multiplier? Or is this not printing at all? And is there any way to extrapolate the amount of inflation this $300B purchase is likely to foster?
cold realities of competition Wed Mar 18 13:31:31 2009 CDT #
MLM says:
Operation "Twist in the Wind" has commenced. Get your family inside and check the supply of canned goods.
MLM Wed Mar 18 13:32:00 2009 CDT #
Michael says:
Monetizing the debt. What are the unintended consequences? Helicopter Ben needs to be burned at the stake for killing out future.
Michael Wed Mar 18 13:32:09 2009 CDT #
Cinco-X says:
OTOH, it could just result in a de facto forced reset. who wants to use a 10 billion dollar bill to buy a soda?
Parent Post
Cinco-X Wed Mar 18 14:04:07 2009 CDT #
Paulo says:
http://blogs.cfr.org/setser/2009/03/18/a-bit-more-to-worry-about-foreign-demand-for-long-term-treasuries-has-faded/
Could the FED be trying to stabilize prices due to lack of demand?!
Paulo Wed Mar 18 13:32:44 2009 CDT #
crispy and cole says:
Everyone buying Guns and Glod is going to start selling them back for $.50 on the dollar....All the Glen Beck listeners are going to be pissed. LOL!!
crispy and cole Wed Mar 18 13:32:54 2009 CDT #
Bob the Builder says:
Wrong. Ben Just offered to pay you 85 cents for your dollar and the suckers are loving it.
Parent Post
Bob the Builder Wed Mar 18 14:11:11 2009 CDT #
Tank says:
What world are you in?
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Tank Wed Mar 18 16:02:04 2009 CDT #
Anonymous says:
Feck.
I guess I'll burn my dollars for heat next winter.
Anonymous Wed Mar 18 13:34:06 2009 CDT #
mp says:
The mp organization is going to get into the rubber stamp business. We are bullish on the following rubber stamps:
Type 1 stamp- 000
Type 2 stamp- 000,000
Type 3 stamp- 000,000,000
Type 4 stamp- 000,000,000,000
We expect to sell a lot of these to the Treasury Dept by arguing they don't need to make new printing plates, just hire illegal immigrants to stamp the zeroes onto the old bills with our special rubber stamps.
mp Wed Mar 18 13:34:07 2009 CDT #
Rufus the Doofus says:
Please let me know when you're going public. :)
Parent Post
Rufus the Doofus Wed Mar 18 20:57:38 2009 CDT #
WAWAWA says:
When FED says they are buying US treasuries, it means that the FED is literally printing US $ and then buy US treasuries.
Right? Is that how it works?
They swapp newly printed dollar bills with newly printed treasury bills !?
WAWAWA Wed Mar 18 13:34:27 2009 CDT #
blah says:
i think the biggest irony will be when all these inflationary runaway miracle hail marys lead to... a bigger deflation than ever.
blah Wed Mar 18 13:34:58 2009 CDT #
bfatz says:
Just got out of cash, heading for the TIPS window until further notice.
bfatz Wed Mar 18 13:35:07 2009 CDT #
Anonymous says:
hmm..........main reason of doing this is to put more people from cash into treasuries assuming China will stop buying?
Parent Post
Anonymous Wed Mar 18 13:40:47 2009 CDT #
Haha says:
Look at Gold!!!
----------------
Would have been much more of a move if they hadn't taken it down earlier. Am much more inclined to believe in blatant manipulation now.
Haha Wed Mar 18 13:35:38 2009 CDT #
MLM says:
Gotta agree with you. Pretty amazing.
Parent Post
MLM Wed Mar 18 13:37:45 2009 CDT #
poic.v20 says:
I just went into the bedroom and changed into my special brown pants I had set aside for just this occasion.
poic.v20 Wed Mar 18 13:36:20 2009 CDT #
Anonymous says:
"WAWAWA says:Today, 2:34:27 PM“When FED says they are buying US treasuries, it means that the FED is literally printing US $ and then buy US treasuries.
Right? Is that how it works?
They swapp newly printed dollar bills with newly printed treasury bills !? "
Yes, I think so. Also called quantitative easing. worked for japan right??
Anonymous Wed Mar 18 13:36:33 2009 CDT #
Nemo says:
Oh, and of course, TBT down. :-)
"Don't fight the Fed"
Nemo Wed Mar 18 13:36:39 2009 CDT #
Basel Too says:
rockyr: http://www.kitco.com/charts/livegoldnewyork.html
Basel Too Wed Mar 18 13:36:44 2009 CDT #
Calculated Risk says:
WAWAWA, yep. Quantitative easing. Print money. The Fed WANTS to reflate - they want people to worry about inflation (not deflation). That is their goal.
best wishes.
Calculated Risk Wed Mar 18 13:37:01 2009 CDT #
ScroogeMcDuck says:
gold jumped 6% in a matter of minutes to $928
ScroogeMcDuck Wed Mar 18 13:37:11 2009 CDT #
blah says:
yes look at gold... wow. i guess the world knows what this means?
blah Wed Mar 18 13:37:25 2009 CDT #
ac says:
Treasury bond futures are up 8 handles!
Damn... I bought some es futures in anticipation of the announcement. This would have been a lot smarter move.
ac Wed Mar 18 13:37:36 2009 CDT #
reptillian says:
"In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term."
Is "inflation below rates that best foster economic growth" equivalent to deflation?
reptillian Wed Mar 18 13:38:11 2009 CDT #
Dead_Monkey_Bounce says:
IBM is a B2B company, not a B2C company. It's irrelevant whether they have anything you want as long as their server business, embedded business, chip fabrication, and chip design businesses all continue, not to mention their consulting businesses. They sold off their B2C lines long ago to Lenovo.
Dead_Monkey_Bounce Wed Mar 18 13:38:20 2009 CDT #
debtinator says:
IBM: from great American company to lackluster global outsourcing company. They're probably next to whine for a bailout.
Parent Post
debtinator Wed Mar 18 13:46:00 2009 CDT #
crispy and cole says:
"Yes, I think so. Also called quantitative easing. worked for japan right??"
Then why would anyone buy glod??
crispy and cole Wed Mar 18 13:38:32 2009 CDT #
Haha says:
Look at the dollar instead of gold. Boy are things going to get expensive soon.
Haha Wed Mar 18 13:38:56 2009 CDT #
Apprentice says:
Rock paper scissors
paper covers rock - if money can be created out of thin air, it can also buy gold and silver ad infinitum so you have to ask yourself, what's the difff?
Apprentice Wed Mar 18 13:39:31 2009 CDT #
S says:
This is totally scary......absolutely scary stuff. No worry bill gross is selling to treasury
S Wed Mar 18 13:39:40 2009 CDT #
Dead_Monkey_Bounce says:
By coincidence, I am also wearing brown pants today, but I doubt that I'll need them, I have self-control.
Dead_Monkey_Bounce Wed Mar 18 13:40:11 2009 CDT #
Michael says:
How do we possibly unwind all this government market manipulation and intervention down the road? When can the unwinding possibly begin, 1 year, 2 years, never?
Michael Wed Mar 18 13:40:12 2009 CDT #
MS says:
three simple words:
Out of Control...
We have no market and this release shows the lengths they are willing to go to preserve what is not worth preserving.
Ciao
MS
MS Wed Mar 18 13:41:08 2009 CDT #
Basel Too says:
if money can be created out of thin air, it can also buy gold and silver ad infinitum so you have to ask yourself
There comes a point when the oil sheiks say no more of that funny green stuff. hope by then, we'll be energy independent 8-)
Basel Too Wed Mar 18 13:41:12 2009 CDT #
charlie says:
It should be clear that this was inevitable. It should also be clear this is just the start. The FED is going to have to buy trillions of debt over the next 5 or so years. It won't make things better, but it will help prevent a total collapse.
The downside is we may have a bubble in everything (rather high inflation), but when the choice is this or a depression, it's probably worth the risk.
England did this to a lesser extent. China and Japan have effectively been doing this for years. I expect any country with a currency strong enough to get away with it to follow suit.
I think this is good news.
charlie Wed Mar 18 13:41:27 2009 CDT #
Paulo says:
We are all due for a quick brush up on inflation theory, it seems it's coming.
Paulo Wed Mar 18 13:41:45 2009 CDT #
Cinco-X says:
Check out:
http://dshort.com/ and
http://www.shadowstats.com/
Very good stuff.
Parent Post
Cinco-X Wed Mar 18 14:12:50 2009 CDT #
Uncle Billy, Mental Widget says:
Quan-TI-tah-tive, said quickly, with a slight stutter.
Uncle Billy, Mental Widget Wed Mar 18 13:42:35 2009 CDT #
ac says:
England did this to a lesser extent. China and Japan have effectively been doing this for years. I expect any country with a currency strong enough to get away with it to follow suit.
I think this is good news.
How is Japan doing right now?
They have the biggest public debt in the developed world and their economy is imploding.
ac Wed Mar 18 13:42:53 2009 CDT #
charlie says:
How is Japan doing right now?
I'm not saying the problem is solved. I'm saying it's better than the alternative. Japan has been stuck for a long long time, but it would have been worse without QE.
The FED really has no choice but to do this. The good news is they've come clean and admitted it. It's like the first step to overcome addiction is to admit you're an addict.
Parent Post
charlie Wed Mar 18 13:50:16 2009 CDT #
S says:
Charlie,
What happens when the fed keeps buying -- you grow your debt load so much that you are forced to keep rates low to service the debt. Japan basically. Not only that buy subsidizing the banks debt you crowd out corproate paper as they are paying 300 bps lower than comps. Printiing money is nopt a solution and inflation which is not reflected in rates or in wages is a death cocktail. So go ahead and keep telling yourself that this is the only option. How about shutting the banks and cleaning out the bondholders instead of taxpayers. No way the bond market holds up
Parent Post
S Wed Mar 18 14:03:27 2009 CDT #
charlie says:
What happens when the fed keeps buying -- you grow your debt load so much that you are forced to keep rates low to service the debt.
The debt load doesn't grow. It shrinks. The fed is basically printing money to pay off debt. The result is more money in circulation since those who held the bonds have to put the money someplace else.
I think this can be inflationary, but it's not likely going to lead to hyper-inflation unless the FED goes way overboard.
Look at China as an example. They peg their currency to the USD (Not officially, but in practice). When they do this they sell bonds to their citizens and use the money to buy USD. What happens is they end up buying more USD then they raise from bonds. It's called unsterilized intervention and basically has the same effect as what the US FED is doing. It hasn't caused hyper-inflation in China.
Parent Post
charlie Thu Mar 19 06:19:03 2009 CDT #
Anonymous says:
This isn't like overcoming addiction by admitting you're an addict, because an addict must admit the addiction was bad for them in the first place. The FED is touting this as the newest solution in a long line of non-solutions.
Parent Post
Anonymous Wed Mar 18 14:28:18 2009 CDT #
Rajesh says:
Is my math right? Is it a cool $1.15 trillion that they're printing? Wow, they're almost a third of the way to where they need to be. 8-)
Rajesh Wed Mar 18 13:42:56 2009 CDT #
Comrade Elmo Fudd says:
is the market opening at 3PM today?
Comrade Elmo Fudd Wed Mar 18 13:42:57 2009 CDT #
Rob Dawg says:
the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.
Reptilian beat me to it. A Fed that cannot so much as utter utter the word "deflation" is a Fed that is unwilling to address the current circumstances. I am being increasingly forced to accept the prospect that they accept hyperinflation as less odious than mild deflation.
Rob Dawg Wed Mar 18 13:43:00 2009 CDT #
CRbot says:
The Latest from Ritholz:
Bad Headline of the Day: U.S. Housing Starts Rebound
CRbot Wed Mar 18 13:43:04 2009 CDT #
Angry Saver says:
I view this as bad news for the markets in the longer term. The fed is swapping zero interest cash for interest bearing treasuries. This will help the banks in the short run because the fed is in effect overpaying for the treasuies. But in the future, the government will have a much larger presence in the market. The government will crowd out private industry and create even bigger crowds of government grift industries.
This is only good for those with insider access to the purses of government.
Angry Saver Wed Mar 18 13:43:05 2009 CDT #
bearly says:
TBT puts doubled in 10 seconds. Jas must be smiling.
Exporters should be happy about the currency getting trashed. Why buy securities when the Fed is goosing treasuries ?
bearly Wed Mar 18 13:43:25 2009 CDT #
RE says:
"Yes, I think so. Also called quantitative easing. worked for japan right??"
Then why would anyone buy glod??
Because Japan's debt is at 170% gdp. Very difficult to pay back especially especially in a rising interest rate environment. They are praying just like the U.S.
RE Wed Mar 18 13:43:42 2009 CDT #
wally says:
"up to" are the key words. As in: "We will be throwing up to all of the furniture into the fireplace".
wally Wed Mar 18 13:44:01 2009 CDT #
CRbot says:
The Latest from Ritholz:
FOMC Statement
CRbot Wed Mar 18 13:44:37 2009 CDT #
rich says:
Now (or soon) is a great buying op in TBT. I can not see the Fed buying up the longest end of the Treasury curve, which is where TBT lives. It's a waste of their ammo.
You know what the Fed is doing. They are trying to defend psychologically against massive dumping of long Treasuries, and it's more a PR war than anything. They are basically agreeing to buy China/Japan Treasuries, while discouraging same owners from dumping more.
It's a desperate strategy to implement in the real world. Watch commodities fly, and TBT gradually claw back today's losses. The stock market bounce on this is very temporary and market will probably start having second thoughts very soon.
rich Wed Mar 18 13:44:42 2009 CDT #
graingod says:
Rich your TBT theory is flawed, Fed has now shown they will intervene at any point, if summer unemploy. numbers bust 10%, guess what happens to TBT in the flight to quality that will ensue. you could have a sub 2% 10 yr. and a 30 on TBT. When you think TBT think puts.
Parent Post
graingod Wed Mar 18 18:25:29 2009 CDT #
Anonymous says:
Dollar just went straight down against all currencies!
..
This single action from the FED has STOLEN our hard earned savings. Its one thing to do it through taxation, but now this. Its BULLSH*T.
We need to call Congress NOW and demand they investigate the FED
..
..
(202) 224-3121
..
Tell your congressman NOW to SUPPORT H.R. 1207, the Federal Reserve Transparency Act of 2009, a bill requiring that an audit of both the Fed's Board of Governors and the Federal Reserve Banks be completed and reported to Congress before the end of 2010.
..
(202) 224-3121 Light up that switchboard now!
..
..
Anonymous Wed Mar 18 13:45:51 2009 CDT #
Bob the Builder says:
the time for political solutions is past.
Parent Post
Bob the Builder Wed Mar 18 14:24:48 2009 CDT #
Mr. Sparkle says:
@Dead Monkey - that chip mfg biz is more like an IP house at this point. They got the State of NY to pony up some dough for the Albany facility and then they farm all the work out to their tech alliance. Voila! I must say that some of the things I've seen presented in this regard are astonishing. I don't know anything about their chip design though.
Mr. Sparkle Wed Mar 18 13:45:54 2009 CDT #
Anonymous says:
Great, more money to the lazy that work the system for government programs, welfare, food stamps.
Anonymous Wed Mar 18 13:45:58 2009 CDT #
ZackAttack says:
Buying agencies and treasuries on the long end.
Hmmm... those are exactly the same categories where demand was seen to be cliff-diving in the January TIC data.
Gotta be a coincidence.
ZackAttack Wed Mar 18 13:47:23 2009 CDT #
Uncle Billy, Mental Widget says:
"Great, more money to the lazy that work the system for government programs, welfare, food stamps."
Ezra Klein, is that you?
Uncle Billy, Mental Widget Wed Mar 18 13:48:22 2009 CDT #
Anonymous says:
Look at all the straight lines ... all down.
http://money.cnn.com/data/currencies/index.html
Call congress (202) 224-3121
Support HR1207
Anonymous Wed Mar 18 13:48:34 2009 CDT #
Anonymous says:
What happened just after 2PM? Dow went positive all of a sudden.
Anonymous Wed Mar 18 13:49:00 2009 CDT #
MS says:
gave at the FAZ office today....:-(
Not much but it was worth the try IMO...
Ciao
MS
MS Wed Mar 18 13:49:25 2009 CDT #
Captilulated way toooooooo late says:
faz got me this morning too....
Parent Post
Captilulated way toooooooo late Wed Mar 18 14:11:12 2009 CDT #
Guest says:
So how much money did Conjure lose today? Probably an epic amount. Nice call shorting treasuries.
Guest Wed Mar 18 13:51:11 2009 CDT #
Outsider says:
Look at the bright side. All those posting wars on inflation vs. deflation will finally cease.
Outsider Wed Mar 18 13:51:45 2009 CDT #
poic.v20 says:
"The FED really has no choice but to do this. "
Of course they have a choice. Your saying the possibility of hyper-inflation is better than deflation? You might want to talk to people who lived through hyper-inflation before jumping to the conclusion that the FED had no choice.
poic.v20 Wed Mar 18 13:52:48 2009 CDT #
Comrade Elmo Fudd says:
timmay found some of hank's viagra stash today, fer sure
Comrade Elmo Fudd Wed Mar 18 13:53:08 2009 CDT #
blah says:
inflation/deflation.. it doesnt matter. the whole world is just getting poorer and poorer. numbers wont matter when you dont have a job and are eating your ramen noodle feast with the family.
blah Wed Mar 18 13:53:23 2009 CDT #
Anonymous says:
Charlie,
How the hell does this end well? How does this end with a better long term U.S. economy with trust in the market and our money printers the FED?
This just proves to me that the value of my savings is completely at the whim of some closeted bankers.
This just proves that we have no free market and we NEVER will if the FEDERAL RESERVE keeps its power and governing strategy.
Overall this is a huge loss of freedom for the USA and the world.
We are all at the whim of bankers egos.
Anonymous Wed Mar 18 13:53:41 2009 CDT #
Michael says:
Kiss America Goodbye.
Parent Post
Michael Wed Mar 18 13:59:51 2009 CDT #
Angry Saver says:
This is yet another federal reserve sham. A bailout of a foolish, greedy and incompetent financial industry.
It's time to seriously discuss alternatives to the current debt-money system.
Angry Saver Wed Mar 18 13:53:42 2009 CDT #
Haha says:
Talk about painting the tape :
New York Closing Price* (APRIL Contract):
Wednesday, March 18 (April contract) \t$889.10
Lookie what gold closed at. Shy of 890, bearish chart. LOL. There are no free markets only interventions.
Haha Wed Mar 18 13:55:15 2009 CDT #
Cornholio says:
We want our inflation back, we want our bubble back, we want our fraud back, and we want it back now.
Cornholio Wed Mar 18 13:55:16 2009 CDT #
poic.v20 says:
Better hope we don't get a bond market dislocation out of this. We had that in the early 30s. How did that turn out? I know, we had a DEPRESSION
poic.v20 Wed Mar 18 13:55:49 2009 CDT #
bearly says:
Tresuries UP but dollar DOWN more. China just lost a pile of $$$$$$$$
bearly Wed Mar 18 13:58:00 2009 CDT #
All Fall Down says:
If I were a Chinese premier what would I do next?
All Fall Down Wed Mar 18 13:58:13 2009 CDT #
Bob the Builder says:
Hit the bid and Fire up the fighter jets. There's a helicopter need shooting down.
Parent Post
Bob the Builder Wed Mar 18 16:22:43 2009 CDT #
blah says:
i cant wait for the next bailout. the economy is still floundering... i wonder if ibm is next or ge... we shall see!
blah Wed Mar 18 13:58:19 2009 CDT #
Angry Saver says:
Quantitative (dis)easing is an admission of failure by the fed. We have neither price stability nor maximum sustainable employment.
End the fed now.
Angry Saver Wed Mar 18 13:58:44 2009 CDT #
Anonymous says:
If I were a Chinese premier what would I do next?
------------------------
Divest.
Anonymous Wed Mar 18 13:59:37 2009 CDT #
debtinator says:
In glod we trust?
debtinator Wed Mar 18 13:59:46 2009 CDT #
China says:
End the fed now.
------------------------
Echo that.
China Wed Mar 18 14:00:18 2009 CDT #
Michael says:
End the Fed if you want America to survive, otherwise kiss it goodbye.
Parent Post
Michael Wed Mar 18 14:01:55 2009 CDT #
burnside says:
Watch commodities fly, and TBT gradually claw back today's losses. The stock market bounce on this is very temporary and market will probably start having second thoughts very soon.
Well, Rich, guess I don't have to type it. You just did. . . +1
burnside Wed Mar 18 14:00:29 2009 CDT #
Comrade Elmo Fudd says:
helicopters from the FED have carried out the large scale dumping of SSRI's into the water supply of all major cities
no worry, no depression this time around
Comrade Elmo Fudd Wed Mar 18 14:00:47 2009 CDT #
Anonymous says:
Is hyperinflation worse than deflation?
Much worse-the order of events will be hyperinflation, crash AND THEN deflation.
Anonymous Wed Mar 18 14:00:57 2009 CDT #
Broker says:
"We are going to buy whatever the f@ck is out there." Way to go Benny!
Broker Wed Mar 18 14:01:26 2009 CDT #
Comrade Kristina says:
By welfare recipients you mean GS and JPM, right?
Comrade Kristina Wed Mar 18 14:01:32 2009 CDT #
Gavshire Hathaway says:
This was a very bad decision. This will not preserve equities, could potentially trigger a selloff in treasuries, and increases the likelihood of a currency collapse. Run for your lives.
Gavshire Hathaway Wed Mar 18 14:02:23 2009 CDT #
Anonymous says:
Uncle Billy, Mental Widget says:Today, 11:48:22 AM
“"Great, more money to the lazy that work the system for government programs, welfare, food stamps."
Ezra Klein, is that you?
You are misinterpreting my point.
Anonymous Wed Mar 18 14:05:23 2009 CDT #
Guest says:
He mis-typed his handle. It's "Uncle Billy, Mental Midget"
Parent Post
Guest Wed Mar 18 14:34:54 2009 CDT #
China says:
Look for USD/INX
http://www.global-view.com/forex-trading-tools/usindex_charts.html
The question now lies as to whether anyone else will ease quantitatively. The next few days will provide an answer.
China Wed Mar 18 14:05:24 2009 CDT #
Comrade Elmo Fudd says:
Frazier wasn't waiting for the market to open, was he?
Comrade Elmo Fudd Wed Mar 18 14:05:36 2009 CDT #
MaryAnn says:
What if China requires cash up front for the next 50 years?
MaryAnn Wed Mar 18 14:06:33 2009 CDT #
Cooking ramen in my percolator says:
Will there ever be a good outcome after all these?
Cooking ramen in my percolator Wed Mar 18 14:06:50 2009 CDT #
Anonymous says:
Well, I'm in DC and I hear helicopters
FED money drop?
Anonymous Wed Mar 18 14:07:01 2009 CDT #
Comrade Kristina says:
Thread music
http://www.dailymotion.com/video/x1kweo_the-vapors-turning-japanese_creation
Comrade Kristina Wed Mar 18 14:07:07 2009 CDT #
Michael says:
Isn't the Fed just a private company with the power to print money and steel everything with its purchasing power for it's private owners? We are going to need more pitch forks.
Michael Wed Mar 18 14:07:16 2009 CDT #
dan w says:
Bottom line: Take your pick: CIVIL WAR, SOVEREIGN DEFAULT or TAX REVOLUTION. Maybe all 3!!! What a Jackpot!!! You're gonna have to put a gun to people's heads in order to get them to borrow from the very institutions that have destroyed their futures, regardless of the interest rates. AND, just wait. Wait until the borrowers take their monies and head for the hills. You think credit card defaults are out of control now???!?!? You ain't seen nothing yet! There is a movement afoot to bring the usurers and scumbags and AIG's of the world to their knees, and it is gaining strength. And when they fall, the government falls too. THAT'S what I've been talking about for months now! There is a revolution brewing, and the government seems to want to stoke the fire rather than put it out. Wow. Here is what I said on 12/17/08:
"...We have moved beyond the point where swings in confidence in a system implicitly recognize that system as credible. We have moved to a regime of disbelief in the system, and this disbelief is growing by the hour...on some level we have reached a moment of crisis in our identity as a nation not entirely unlike that which we faced in the mid-19th century. We have reached a point where disbelief in the credibility of the current system will become a force that will tear us apart..."
dan w Wed Mar 18 14:07:36 2009 CDT #
Outsider says:
Well, hyperinflation isn't terrible for fixed-rate mortgages. If you can hold on long enough, your payments are gonna seem lower. Of course, the holding on part is the kicker.
Outsider Wed Mar 18 14:07:47 2009 CDT #
Anonymous says:
Sold to you!!!
Anonymous Wed Mar 18 14:07:53 2009 CDT #
Dead_Monkey_Bounce says:
Tax Revolution, wow that's hilarious.
Dead_Monkey_Bounce Wed Mar 18 14:09:27 2009 CDT #
MS says:
and the lemmings pile into the Euro on the basis the it "sucks less" then the dollar....
Ciao
MS
MS Wed Mar 18 14:09:54 2009 CDT #
Stupid is as... says:
http://mises.org/story/3364
Stupid is as... Wed Mar 18 14:10:26 2009 CDT #
scone says:
We'll be moving our money out of the USA and emigrating to Australia asap. Thank God I married a foreigner.
scone Wed Mar 18 14:11:00 2009 CDT #
Dust Bowling for Dollars says:
Perhaps if you know what Ben knows, you don't have the long-term, or even intermediate term, health of the U.S. Dollar as your foremost priority.
Dust Bowling for Dollars Wed Mar 18 14:11:09 2009 CDT #
blah says:
i dont know what inflation youre seeing... but in the last 3 months i got a 10% cut in wage, 401k no match, no overtime. and my biggest 'asset', my condo... has lost 20% 'value' where's my inflation? oh... its for the banks. i see. we'll see how that works out for amerikkka.
blah Wed Mar 18 14:11:28 2009 CDT #
Cinco-X says:
They're not seeing price inflation. They're seeing the giant shadow of monetary inflation, which is currently sitting still due to the credit crunch. Once is starts to move, they feel it could crush everything in its path.
So to speak;)
Parent Post
Cinco-X Wed Mar 18 14:19:03 2009 CDT #
Rufus the Doofus says:
I see plenty of inflation when I buy groceries.
Parent Post
Rufus the Doofus Wed Mar 18 21:17:29 2009 CDT #
TC says:
China has more than half trillions of US Treasuries already.
TC Wed Mar 18 14:12:15 2009 CDT #
Anonymous says:
A little hyperinflation to finish off this banana republic, such a fitting end.
Anonymous Wed Mar 18 14:14:05 2009 CDT #
Hal says:
Sooo finally China has stopped buying so much US crap. Woke up, did they? If we can't get our money from China we'll just have to print it.
Hal Wed Mar 18 14:14:48 2009 CDT #
Blackhalo says:
FINALLY! I have been expecting this for a while. Not that I agree with the strategy, but the Fed/Gov are painted into a corner and with the AIG issue casting doubt on any future bank bailouts, this is the way they had to start.
My UDN and PCRDX should pay off if this action really takes place. I have been taking a beating up 'til now.
First DD inflation, then DD interest rates once the FED has to take action to stem a meltdown.
Blackhalo Wed Mar 18 14:14:50 2009 CDT #
Fair Economist says:
Can the hyperventilation about hyperinflation. M1 is already 1.6 trillion. Adding 300 billion will inflate, but it's not going to be even remotely close to hyperinflation. If the Fed had committed to buying 10,000 billion, then we'd be looking at hyperinflation.
Fair Economist Wed Mar 18 14:15:13 2009 CDT #
RockyR says:
"Can the hyperventilation about hyperinflation. M1 is already 1.6 trillion. Adding 300 billion will inflate, but it's not going to be even remotely close to hyperinflation. If the Fed had committed to buying 10,000 billion, then we'd be looking at hyperinflation."
This is only the beginning, friend.
Parent Post
RockyR Wed Mar 18 14:38:51 2009 CDT #
ac says:
Oil back over $50 after hours.
ac Wed Mar 18 14:15:32 2009 CDT #
Zoi says:
I haven't been through this type of Fed action, so how do you play the stock market in reaction?
Zoi Wed Mar 18 14:15:38 2009 CDT #
RockyR says:
"I haven't been through this type of Fed action, so how do you play the stock market in reaction?"
I don't think anyone else here has been, either ;-)
Parent Post
RockyR Wed Mar 18 14:39:35 2009 CDT #
Bob the Builder says:
A gambler might look for firms that require little debt used non dollar related inputs and sell inflation sensative exports. An investor would get the hell out of this country to a place with rule of law, hard money and liberty.
Parent Post
Bob the Builder Wed Mar 18 16:00:12 2009 CDT #
Blackhalo says:
"I haven't been through this type of Fed action, so how do you play the stock market in reaction?"
My strategy is UDN, in the event that the Fed actually starts printing money. And PCRDX in case everyone else does too.
Parent Post
Blackhalo Wed Mar 18 14:49:26 2009 CDT #
bearly says:
I am not sure how buying treasuries would even work. This is like a sting operation where anyone standing alongside Ben and his paddle at a long dated treasury auction is going to get skewered. Better to wait until the $300b is all gone and then see where the real bids come in.
bearly Wed Mar 18 14:15:44 2009 CDT #
Rob Dawg says:
The Federal Reserve controls the three tools of monetary policy--open market operations, the discount rate, and reserve requirements.
Which one of these enumerated (limited to exclusively) powers is being used to purchase US Treasury debt?
Rob Dawg Wed Mar 18 14:16:40 2009 CDT #
Hal says:
300 billion, the pikers. Why not 3 trillion and get ahead of the game? Then it will be a longer time before we have to purchase another 3 trillion. LOL
Hal Wed Mar 18 14:18:27 2009 CDT #
Interesting Times says:
TBT looks like a coiled spring.
Interesting Times Wed Mar 18 14:18:59 2009 CDT #
Anonymous says:
"Everyone buying Guns and Glod is going to start selling them back for $.50 on the dollar....All the Glen Beck listeners are going to be pissed. LOL!!"
Obama has made me more money in the gun and ammo business than I ever dreamed possible.
Last year was a record and I figure this year is gonna be a new Ferrari for the shop vehicle...boy it truly sucks running a debt free business!!!
Anonymous Wed Mar 18 14:20:10 2009 CDT #
Hal says:
I'm sure the US will be just fine with national debt at 300% of GDP. After all didn't that wise Mr. Cheney say "deficits" don't matter?
Hal Wed Mar 18 14:20:15 2009 CDT #
ac says:
Charlie,
What happens when the fed keeps buying -- you grow your debt load so much that you are forced to keep rates low to service the debt...
To put it another way:
We simply have to keep issuing more and more debt to pay off past debt with illusory promises of future payment.
This is Ponzi Finance.
The government is doing exactly what Wall Street hedge funds did to cause this mess.
The US is now just a giant version of all those hedge funds that blew up and took the financial system with it.
Obama and Bernanke are the biggest leveraged hedge fund managers in history.
ac Wed Mar 18 14:20:27 2009 CDT #
Kung Fu Panda says:
Ben warned us many times that he would do this. Now, it's torpedoing Japan's efforts to weaken the yen. I expect to see Japan's trade balance continue as a deficit.
Kung Fu Panda Wed Mar 18 14:20:30 2009 CDT #
cara says:
CR,
can you please write a quick new post explaining how one can both create inflationary "concerns" and reduce mortgage rates at the same time.
And I guess it's really a good time for those spread update plots, with explanations pertaining to the latest fed action.
Thanks!!!!!
cara Wed Mar 18 14:20:55 2009 CDT #
burnside says:
Oh, look. TBT's got a little color back in her cheeks. Honey? How many fingers do you see? Nonono . . . you just relax for a minute - I'll go get some brandy.
burnside Wed Mar 18 14:21:11 2009 CDT #
Samdog says:
Is it safe to say that deflation will end soon (in sharp contrast to the FED/T's endless propaganda campaign)? :-D
Samdog Wed Mar 18 14:21:56 2009 CDT #
The Notorious A.I.G. says:
Let's say I go down to my cat box, extract a few turds, roll them in cocoa, and then call them "chocolates". How is this different from what is now happening to the US dollar?
The Notorious A.I.G. Wed Mar 18 14:21:57 2009 CDT #
Guest says:
"Let's say I go down to my cat box, extract a few turds, roll them in cocoa, and then call them "chocolates". How is this different from what is now happening to the US dollar?"
Thanks for making me spew food all over my keyboard!
Parent Post
Guest Wed Mar 18 14:41:16 2009 CDT #
The Middling Lebowski says:
"extract a few turds, roll them in cocoa, and then call them "chocolates". How is this different from what is now happening to the US dollar?"
With chocolate covered turds, you get some chocolate.
Parent Post
The Middling Lebowski Wed Mar 18 15:51:57 2009 CDT #
Hal says:
If national debt is 300% of GDP and the Fed pays 4% interest on that then interest payments on the debt would come to about 12% of GDP, right? I'm sure the US could handle that. Only 12% isn't all that much. LOL
Hal Wed Mar 18 14:22:24 2009 CDT #
Anonymous says:
CR,
What is YOUR take on the short and long term implications of this FED decision?
A new Post would be great.
Thanks.
-M
Anonymous Wed Mar 18 14:22:32 2009 CDT #
homedad43 says:
Some commenter in the past made the positively great statement: It's not a party until the treasury market pukes.
Beautiful line and I've used it with several people.
Well, Ben just walked in with the kegs. Lots of 'em.
homedad43 Wed Mar 18 14:22:37 2009 CDT #
Anonymous says:
AC.......GREAT POST!
"ac says:Today, 3:20:27 PM“Charlie,
What happens when the fed keeps buying -- you grow your debt load so much that you are forced to keep rates low to service the debt...
To put it another way:
We simply have to keep issuing more and more debt to pay off past debt with illusory promises of future payment.
This is Ponzi Finance.
The government is doing exactly what Wall Street hedge funds did to cause this mess.
The US is now just a giant version of all those hedge funds that blew up and took the financial system with it.
Obama and Bernanke are the biggest leveraged hedge fund managers in history.
"
Anonymous Wed Mar 18 14:23:31 2009 CDT #
Michael says:
FUBO
Parent Post
Michael Wed Mar 18 14:26:04 2009 CDT #
Tom says:
What about the shorter term rates, will they stay low then as well? I ask because my mortgage is indexed to the 1 year CMT.
Tom Wed Mar 18 14:23:36 2009 CDT #
Fair Economist says:
Which one of these enumerated (limited to exclusively) powers is being used to purchase US Treasury debt?
Open market operations, which is the purchase or sale of Treasury debt. The Fed can do other things, though - those are just the ones it has an exclusive monopoly on.
Fair Economist Wed Mar 18 14:24:03 2009 CDT #
ac says:
One other observation. Everything you are seeing is a continuation of the policies under the Bush admin:
1) Big borrowing
2) Big spending
3) Money printing
4) Market manipulation
Nothing has changed.
ac Wed Mar 18 14:24:06 2009 CDT #
Guest says:
"One other observation. Everything you are seeing is a continuation of the policies under the Bush admin:
1) Big borrowing
2) Big spending
3) Money printing
4) Market manipulation
Nothing has changed."
True. However I would say those behaviors are accelerating, and getting much worse.
Parent Post
Guest Wed Mar 18 14:44:44 2009 CDT #
Eric K. says:
The Fed is clearly trying to avoid deflation, and still expects less-than-desirable (their words - not mine)inflation. They knew they were going to do this when Ben got on 60 minutes and told everyone not to fear inflation right now. They're afraid they can't stop the deflation, and they might be right.
I believe the initial market reaction (e.g. gold, dollars, oil) is purely emotional. I predict the dollar climbs right back up to where it was... after all, demand is still higher than supply. No?
Eric K. Wed Mar 18 14:24:15 2009 CDT #
Basel Too says:
well that was fun hour. is the market opening? i see frazier is wobbly.
Basel Too Wed Mar 18 14:25:04 2009 CDT #
Michael says:
The stock market knows the country just died.
Michael Wed Mar 18 14:25:22 2009 CDT #
Mannwich says:
What's happening to Kermit?
Mannwich Wed Mar 18 14:25:32 2009 CDT #
S says:
For all those saying inflation will solve this:
(1) Inflation doesn't mean anything if it is not in your wages?
(2) Fed works to pervert jominal rates thereby stealing your savings
(3) inflation doesn't do anything to reverse the wage labor arbitrage..
(4) ceterus paribus unless the wage gains EXCEED inflation you lose
(5) inflation does nothign for housing other than push up the cost of your future purchase -- see point 4
Still trying to find that silver line that the retards keep pumping
(3) Inflation will
S Wed Mar 18 14:25:50 2009 CDT #
Guest says:
S -
So I get it, deflation is good then. Man, you're smart. You should run the Treasury. Long live deflation. Its worked great for Japan. Great post. Thanks.
Parent Post
Guest Wed Mar 18 14:28:15 2009 CDT #
JWM in SD says:
Japan didn't choose deflation you fing nimrod, they got it by default because they tried to choose inflation. What the F is the matter with you anyway? You've got all arguments backwards. I'm beginning to get really suspicious about who you are.....
Parent Post
JWM in SD Wed Mar 18 14:34:57 2009 CDT #
S says:
@guest
Yeah actually deflation is great if you want to buy a house and you actually saved money. Deflation is great for people who want to buy a car. Deflation is great for pruchasing power. Not so great for those with debt. Oh yeah that is the US economy I forgot. Oh yeah I forgot you have to have savings. Ok well can;t "invent" them so lets just print money hold out nose and pretend that the mirage was real. Genius how is the Fed loading up its balance sheet and monotizing debt bullish for the US? Oh yeah and as that dollar gets destroyed how about those commodities? yeah you might be able to pay off your house but you will not be able to eat. How about restructuring the banking space - clipping the bondholders - eliminating guarantees and if need be recapping new banks. Oh yeah that was stigiliz idea -- he must be a genius too -- actually he has a nobel prize. Yves calls it regulatory capture I call it stockholm syndrome, though that is surely offense to the good folks in Sweden. Go back to watching jim cramer and the useless CNBC shills. Bernanke was right the only thing he fears is the lack of political will.
What part of broken business model don't you get?
Parent Post
S Wed Mar 18 14:38:19 2009 CDT #
Cinco-X says:
1)Inflation cannot be sustained if it is not in your wages. It would just lower demand.
2)It's a percentage thing; if everyone loses, say, 20%, it hurts the rich guys more than the poor guys w/o savings.
3)I'm not sure what you're trying to say here, but inflation implies a falling dollar making our goods more attractive overseas.
4)See 1)
5)The idea should be to push the rest of the economy in line with housing.
I don't know if it'll work out that way, but I think that's the reasoning...
Parent Post
Cinco-X Wed Mar 18 15:33:59 2009 CDT #
otishertz says:
FOMC: Buy $300 Billion in Long Term Treasuries, More MBS
now that would explain 400 point moves in francs and euros since yesterday.
otishertz Wed Mar 18 14:25:55 2009 CDT #
briwerk says:
Kermit: I, uh... know it's usually sunny days here on Sesame Street, um... but...
briwerk Wed Mar 18 14:26:33 2009 CDT #
Anonymous says:
Oh goody now Obama has someone to pay for his socialize heath care program, of course a happy meal at MC Dee will be about $35 but what the heck the fatties need to go on a diet anyway.
Anonymous Wed Mar 18 14:27:01 2009 CDT #
otishertz says:
"take on the short and long term implications of this FED decision? "
this is monetizing the national debt. also known as The End.
otishertz Wed Mar 18 14:27:14 2009 CDT #
Anonymous says:
Bernanke: I threaten to monetarily ease
Everybody around BB: I dare you
BB holding his breath: I threaten to monetarily ease. I am serious.
Everybody around BB: I dare you
(BB releases a loud and smelly sound)
BB: I told you not to dare me
Smell all around and everybody is covering their noses
Moral: I am sure there is a moral somewhere but I will get to it when I can get my hands off my nose
Anonymous Wed Mar 18 14:27:17 2009 CDT #
ac says:
I'm sure the US will be just fine with national debt at 300% of GDP. After all didn't that wise Mr. Cheney say "deficits" don't matter?
Dick Cheney and Paul Krugman both said this.
Notice how you never see them in the same room at the same time?
ac Wed Mar 18 14:27:21 2009 CDT #
poic.v20 says:
"Can the hyperventilation about hyperinflation. M1 is already 1.6 trillion. Adding 300 billion will inflate, but it's not going to be even remotely close to hyperinflation. If the Fed had committed to buying 10,000 billion, then we'd be looking at hyperinflation."
Foreign debt holders losing faith in our currency and running for the side-lines can cause hyper-inflation if done in large enough numbers and for a long enough period.
poic.v20 Wed Mar 18 14:27:43 2009 CDT #
EvilHenryPaulson says:
Bingo. The tradeability of US denominated debt is itself a feedback loop. The greater uncertainty of being paid back in real terms, increases the premium demanded for risk, which makes debt harder to repay/roll-over, ...
Parent Post
EvilHenryPaulson Wed Mar 18 14:38:38 2009 CDT #
Michael says:
“I saw Watchmen last evening. The premese of the movie is as follows;
The Watchmen are the Bilderberg Group in disguise, playing God.
Michael Wed Mar 18 14:27:55 2009 CDT #
Paradigm Lost says:
Commenters of reason being buried under reactionary, rude, clueless commenters. Where did all you a$$holes come from. Crawl back under rocks.
Paradigm Lost Wed Mar 18 14:28:44 2009 CDT #
Samdog says:
You're calling people rude?
I guess it's now OK to call someone an "As***le" in polite company ....
Parent Post
Samdog Wed Mar 18 14:32:18 2009 CDT #
ille.vir says:
Direct monetization. So we are here already. The last card, the ace in the hole, and Bernanke's shot it off already. Ben, you have been a disaster, and it's even worse because you had a recent example to serve as a textbook of what not to do. Did exactly the same thing, when you vowed you wouldn't.
ille.vir Wed Mar 18 14:28:49 2009 CDT #
Basel Too says:
QE will help with the dollar shortage in E. Europe. I guess that's a silver lining.
Plus, devaluation doesn't harm Americans unless they are tourists 8-)
Basel Too Wed Mar 18 14:28:55 2009 CDT #
EvilHenryPaulson says:
Fair Economist
They didn't announce $10tn of new money creation today, but they have now publicly announced they are past the point of no return. They will money-create until they see some inflation, the inflection will be sharp, and they won't be able to gradually withdraw the money because the system does not work that way. It's not a linear or even a parametric equation.
EvilHenryPaulson Wed Mar 18 14:29:37 2009 CDT #
Yalt says:
Fair Economist
They didn't announce $10tn of new money creation today, but they have now publicly announced they are past the point of no return. They will money-create until they see some inflation
They are, as always, managing expectations. What they will actually do remains open--they haven't committed anything near the amount that would result in a hyperinflation. Explicit (probably partial) sovereign default always remains an alternative, if necessary.
Parent Post
Yalt Wed Mar 18 15:30:59 2009 CDT #
RE says:
Well, Hamilton prepared everybody for this on November 9th. I posted about it.
http://www.econbrowser.com/archives/2008/11/the_new_improve.html
RE Wed Mar 18 14:29:38 2009 CDT #
Guest says:
“TBT looks like a coiled spring."
More like a busted slinky. Bad call being short long term USTs, bad call.....
Guest Wed Mar 18 14:30:21 2009 CDT #
Dust Bowling for Dollars says:
Smoot Hawley, anyone? Oh, wait, I know - balance the budget! Sanction Japanese oil buys!
Dust Bowling for Dollars Wed Mar 18 14:30:59 2009 CDT #
Comrade Elmo Fudd says:
kermit's free falling
Comrade Elmo Fudd Wed Mar 18 14:31:13 2009 CDT #
reptillian says:
zoi asks: I haven't been through this type of Fed action, so how do you play the stock market in reaction?
I have heard that you setup a one-cancels-all order, with a buy
stop somewhat above the current level and a sell stop below the
current level. If it spikes up, to your buy stop, you'll be in long; if it spikes down to your sell stop, you'll be in short.
reptillian Wed Mar 18 14:32:09 2009 CDT #
CRbot says:
The Latest from Ritholz:
The Multiplicity and Complexity of Phenomena
CRbot Wed Mar 18 14:32:26 2009 CDT #
Publius13 says:
"We need to call Congress NOW and demand they investigate the FED"
You misspelled ABOLISH.
Publius13 Wed Mar 18 14:33:14 2009 CDT #
Tim Geithner\'s Tax Man says:
It's all part of the plan!
Tim Geithner\'s Tax Man Wed Mar 18 14:33:28 2009 CDT #
homedad43 says:
Someone once said that it ain't over until the treasury market pukes.
Great line.
Well, Ben just brought the kegs. Lots of 'em.
As to TBT? Well, a bunch of the money that I had in the IRA in TBT was a loss, so I sold it out, removed and purchased PM.
TBT will be great for awhile. And then when things collapse, it'll suck like another lemming off the cliff.
think that I made the right long-term move.
The dollar's screwed. royally screwed.
homedad43 Wed Mar 18 14:33:32 2009 CDT #
poic.v20 says:
"S -
So I get it, deflation is good then. Man, you're smart. You should run the Treasury. Long live deflation. Its worked great for Japan. Great post. Thanks."
Please examine the political and social structures of countries that experienced deflation versus countries that experienced hyper-inflation.
Here's a hint. Japan and US still have a functioning government.
Now look at the history post hyper-inflation of China, Germany, Zimbabwe, Argentina and Russia.
poic.v20 Wed Mar 18 14:33:35 2009 CDT #
Yalt says:
Here's a hint. Japan and US still have a functioning government.
Now look at the history post hyper-inflation of China, Germany, Zimbabwe, Argentina and Russia.
Germany had a functioning government after its hyperinflation. Hitler post-inflation coup attempt was a laughable failure and landed him in prison, and the country had a fairly successful first attempt at democracy until the global collapse/deflation of '29-'32.
I'm not arguing in favor of hyperinflation...just pointing out that the historical record is seldom as simple as the board ideologues would have us believe.
Parent Post
Yalt Wed Mar 18 15:20:00 2009 CDT #
ille.vir says:
US and Japan both had their bouts of hyperinflation. Happened twice in the US.
Parent Post
ille.vir Wed Mar 18 15:29:33 2009 CDT #
fp says:
Holy crap, the dollar has plummeted to levels not seen since late January! Now it's only up about 17% YoY. Run for the hills, people!
fp Wed Mar 18 14:33:54 2009 CDT #
Eric K. says:
MWMMI (money where my mouth is) ... I just sold all my GLD at $92.30 ... and will re-buy much cheaper in the VERY near future.
The Fed is fighting DE-flation. They'll mop up the excess credit/currency later. Volker remembers how to do that...
Eric K. Wed Mar 18 14:33:57 2009 CDT #
Cynical Crap Shooter says:
Look at the bright side. All those posting wars on inflation vs. deflation will finally cease.
Yes. By now it should be plainly evident to all that turning on the printing presses is going to be deflationary.
Cynical Crap Shooter Wed Mar 18 14:33:58 2009 CDT #
EvilHenryPaulson says:
I have for a long time expected both deflation and inflation.
Deflation for now, the forces behind it are so huge ... they are the system
Inflation later when attraction to the USD fades, re-imported inflation if you will
Parent Post
EvilHenryPaulson Wed Mar 18 14:41:25 2009 CDT #
ille.vir says:
The reason they need to run the presses is because of the massive deflationary forces at work. In the near term at least, the massive deflationary forces will win, IMHO.
Parent Post
ille.vir Wed Mar 18 14:48:31 2009 CDT #
rich says:
Like I said, my barometers for the U.S. dollar's worth is gold, silver, oil and Canadian dollars.
Look at what's happened since the Fed announcement.
Canadian dollar (FXC) is up more than 2%. That's a big move for a currency. Hello hyperinflation!
rich Wed Mar 18 14:35:22 2009 CDT #
CRbot says:
The Latest from Ritholz:
<div class='category_access_protected_title'></div>
CRbot Wed Mar 18 14:35:33 2009 CDT #
Rufus the Doofus says:
A real page-tuner :)
Parent Post
Rufus the Doofus Wed Mar 18 21:27:43 2009 CDT #
z says:
Why do we tax everything except imports?
z Wed Mar 18 14:37:04 2009 CDT #
Cinco-X says:
Free trade agreements?
Parent Post
Cinco-X Wed Mar 18 15:42:17 2009 CDT #
ille.vir says:
10+ years of stagnation is now our best-case scenario. That moral-hazard ridden 5% wamu CD I slid into is the best I'm going to do for a decade. Bank rates will keep sliding, into the age of super-low interest rates. Your savings account rates will start with a bunch of zeros. The only thing banks will buy with the deposits will be more treasury bonds. The only lenders will be loan sharks. And this is the best-case scenario, the non-hyperinflation one. QE doesnt' work! Artificially low interest rates don't work! It has been proven not to work. Why don't the economists get it?
ille.vir Wed Mar 18 14:37:49 2009 CDT #
The Lorax says:
Inflation, deflation, it's all semantics since there is no good yields and nothing to invest in! At the end of the day you will probably be poorer than when you started.
The Lorax Wed Mar 18 14:39:36 2009 CDT #
poic.v20 says:
"Canadian dollar (FXC) is up more than 2%. That's a big move for a currency. Hello hyperinflation!"
Come on Rich, to equate a 2% move in FXC as implying hyperinflation is ridiculous. CDN had 10c moves both ways within a several day period late last year.
I've been buying CDN myself and these moves while large are minor compared to what was going on last year.
poic.v20 Wed Mar 18 14:40:18 2009 CDT #
Angry Saver says:
Bernanke is a sham. About a year ago he was talking about targeting inflation in the range of 1-2%.
What a crock. CPI inflation is a sideshow. Ponzi finance is the real game being played. New debt is issued to pay off old debt. Self liquidating debt is a gamne for suckers.
Here's the problem. Recently it took ~ $5 in debt to create $1 in additional GDP. Presently, we are adding stupendous sums of debt and yet GDP is shrinking. That's some eCONonomic model!
Quantitative (dis)easing may raise prices, but it does NOT quarantee that actual output of goods and services will increase.
We'll be lucky with an outcome like Japans'.
Angry Saver Wed Mar 18 14:40:29 2009 CDT #
bearly says:
EU decided it didn't want to participate in stimulus. SO, Ben starts a currency war, race to devalue. Getting dangerous.
bearly Wed Mar 18 14:42:17 2009 CDT #
ille.vir says:
RE: TBT
I can't believe anyone would still touch TBT. I'm not exactly the most vocal on this board, but I've warned before that direct monetization by the fed is exactly the reason not to touch TBT. It may look like a good, logical play, but you're not taking into consideration the Fed, that has proven they will intervene. They'll keep doing it again and again. Don't fight the fed.
ille.vir Wed Mar 18 14:42:21 2009 CDT #
Angry Saver says:
THOU SHALL NOT STEAL!
It is SO wrong that our financial system is founded on the theory that theft (inflation) is a virtue.
Is it any wonder our eCONomy is in shambles? Is it any wonder our government and business leaders are so immoral and corrupt?
We have lost our way. Principles, human rights and all else is now subservient to the exponential growth debt monster.
All hail money!
Angry Saver Wed Mar 18 14:44:09 2009 CDT #
MS says:
"We'll be lucky with an outcome like Japans'."
Comment of the day....
Ciao
MS
MS Wed Mar 18 14:44:18 2009 CDT #
Bfatz says:
Pelosi said now that things are stabile time for new stimulas plan-$100,000,000,000,000,000,000,000.00.
Bfatz Wed Mar 18 14:44:46 2009 CDT #
Werner says:
So America now has OFFICIALLY committed to HYPERINFLATION !
You'll all go to hell !
Greetings from Weimar !
Werner Wed Mar 18 14:44:48 2009 CDT #
EvilHenryPaulson says:
Werner
I understand your disconnect between domestic consumer prudence and national economic peril, but do be aware that you should not cheer your clients towards doom.
Parent Post
EvilHenryPaulson Wed Mar 18 14:50:09 2009 CDT #
hc says:
Wait... Why all the overreaction? 300B is a drop in the bucket in the treasuries world.
I know it's bad, it's admitting that the Fed messed up. If continued uncontrolled and on an accelerating scale, it's very bad.
But there's no guarentee that this QE will continue indefinitely beyond this one, and there's no indication they've "gone too far" and dislocated the market and USD will be completely worthless tomorrow, next week, etc.
Are people overreacting a bit or am I missing something somewhere? Or are a lot of people on this board short, and this hurts their holding?
If the latter, shame on you. Your biased reaction is just as bad as those bubble blowers when they keep harping on things getting better every quarter.
From what I'm seeing, this hurts (a little) for some parties, funds and some countries -- esp those who've been fleeing and running to safety of the USD and UST.
It's one way to prod these capital away from USD/UST and hopefully into more productive assets where they must share the pain of loss together with the rest of the market. (Running away into USD/UST is a little like absolving one's participation in the market and "not playing". Running into gold is the same too.)
The bad thing about this change, is the danger of going down this slippery slope -- which we're NOT THERE YET despite every doom and gloom statements I'm hearing. The real risk is the danger of this continuing and ultimately ending up Zimbabwe style -- *IF* we don't stop.
But this can also spark a short term bottom, and force previous capital jammed inside UST to participate in the market, which could then actually help us begin a new virtuous cycle. Some may debate this would cause a bubble, but that's a bit far out as a prediction, seeing our immediate worry is deflation at the moment.
hc Wed Mar 18 14:45:16 2009 CDT #
nova says:
Werner,
Nice to see you back! Where you been buddy!
nova Wed Mar 18 14:46:08 2009 CDT #
Michael says:
Bernanke is one of the Watchmen.
Michael Wed Mar 18 14:47:11 2009 CDT #
burnside says:
bearly, x:42:17, that's an eyeopener. I think you're right.
burnside Wed Mar 18 14:47:39 2009 CDT #
MS says:
burnside-
bearly is correct however the currency trade is lemmings personified......look at the action in the euro to see that. They have to go to another FX so they choose the "less sucky" one for the moment.
Ciao
MS
Parent Post
MS Wed Mar 18 14:52:06 2009 CDT #
homedad43 says:
So.
Assuming that we are fucked. There, I said it.
I can't tell my kids, but I'll tell my wife that we're fucked.
What breaks this cycle that EHP mentions in his post of 3:38?
Sorry, FE, but the upfront nominal cost is minimal but the intent is serious and I see absolutely nothing to stop monetization.
Absolutely nothing.
The only thing that will stop it short of economic collapse and full repudiation of the national debt in the world's eyes is purposeful political change.
Starting with the elimination of the Federal Reserve System, now wholly enthrall to the banking system. And that ain't gonna be easy.
homedad43 Wed Mar 18 14:48:20 2009 CDT #
EvilHenryPaulson says:
homedad43
If the amount of losses necessary to absorb up to a financial firebreak were below a few trillion, they could get away with the action. But even if they stopped the losses for a period, it wouldn't matter. The real problem is that the US can't catch a ride on global economic growth to keep things growing domestically, which we can now definitively see was crucial for Japan.
There's no other way out of this other than default. The only choice, the only choice there has ever been for years, is how to manage the default.
Last fall we saw they would go for the high risk strategy of printing fast and early.
Parent Post
EvilHenryPaulson Wed Mar 18 14:59:36 2009 CDT #
MS says:
the $300b figure is pure fiction...I gather they've already blown that much on them starting earlier this year.
It's sort of comical that some believe that they have not bought them already. Google the term "indirect bid" and you'll get a better idea.
Ciao
MS
MS Wed Mar 18 14:48:30 2009 CDT #
RockyR says:
Well. At least we'll get to learn once and for all whether Denninger knows what in the hell he's talking about:
http://www.market-ticker.org/archives/878-Caution-On-Quantitative-Easing-QE.html
RockyR Wed Mar 18 14:48:59 2009 CDT #
nova says:
Michael says: Bernanke is one of the Watchmen.
Michael, they are all watchmen. They watch us! Then they creep in our houses late at night! Werner knows. He wears his Vattis black uniform sometimes when the moon is full.
nova Wed Mar 18 14:50:41 2009 CDT #
Ben Frank\'ll Tank Bernanke says:
Today Ben Franklin Tanked. I'm positive that Mr. Franklin would object to his image being posted to the $100 bill especially as soon its only utility will be as wallpaper, toilet paper, and tinder.
Lets review
(1) financial conspirators through loose monetary policy created false bubble and false demand in technology, houses, securities, and now sovereign bonds. Same conspirators since 2000 have received trading benefits on two large upswings and benefit shorting on two large downswings.
(2) Debt traps have evaporated middle class household wealth from homes and investments/pensions/retirement.
(3) Same players received add'l benefits via short term bonuses stripped from performance.
(4) Endemic risk in financial system is being covered by the presumptions of Treasonry/FedUP Reserve upon the futurative tax flows of citizenry.
(5) Not content to strip value merely by taxation, bubble crash equity redistribution, picking winners and losers, today it was apparent that prior to announcement, select insiders gamed the market again.
(6) Finally, in addition to all above depredations on illusions of wealth, the middle class will now bear the silent exponential tax of inflation.
Mr. Ben has fulfilled expectations. He has supported his cronies and their system of plunder, he has announced massive sovereign debt sales, he has coordinated monetary policy as an internationalist, he has monetized debt, he has begun the inevitable destruction of the dollar.
Glad he did that 60 minutes interview and appeased all our fears. Dance class with the devil.
This is very like pre-French Revolution in Paris without the beloved people's treasury minister. Our Bastille (the emblem of state cruelty and abuse of power)will be the Marriner Eccles Building. Instead of demolition brick by brick; tear it down cancerous precept by precept. Establish a New Order beyond the reach of the parasitical depredations of the money masters.
GOLD.
Ben Frank\'ll Tank Bernanke Wed Mar 18 14:50:47 2009 CDT #
GS Rome says:
Ben Frank, good to hear from you.
Parent Post
GS Rome Wed Mar 18 16:41:45 2009 CDT #
Bob Dobbs says:
"So America now has OFFICIALLY committed to HYPERINFLATION !
You'll all go to hell !
Greetings from Weimar !"
That actually made me laugh! Can't wait for the Beer Hall Putsch!
Bob Dobbs Wed Mar 18 14:52:54 2009 CDT #
poic.v20 says:
"But this can also spark a short term bottom, and force previous capital jammed inside UST to participate in the market, which could then actually help us begin a new virtuous cycle. Some may debate this would cause a bubble, but that's a bit far out as a prediction, seeing our immediate worry is deflation at the moment."
So forcing UST to participate in a market that has M2M accounting, pervasive fraud, unethical and/or criminal participants running firms will get us into a virtuous cycle.
What sort of fricking idiot are you?!?!?! I will keep my money on the side-lines until transparency comes back to the system.
You are simply giving the same excuse that has been used to perpetrate some of the worst historical injustices "The end justifies the means".
poic.v20 Wed Mar 18 14:53:10 2009 CDT #
S says:
echo te idiot comment - sadly its about par for the course in the equity arena
Parent Post
S Wed Mar 18 14:56:40 2009 CDT #
hc says:
"So forcing UST to participate in a market that has M2M accounting, pervasive fraud, unethical and/or criminal participants running firms will get us into a virtuous cycle. "
No... but nobody's forcing you to invest in THOSE companies? There's plenty of decent ones out there. The baby's being thrown out with the bathwater right now, and that's something worth saving.
"not playing" dooms everyone, good or bad.
While I don't agree with what the govt has done till now, and why they didn't nationalize the banks, or why they didn't take steps to cancel CDSs, etc. This does present a possible step forward -- "POSSIBLE" is the keyword here, because it rests on their ability to stop and not continuing QE indefinitely.
Taking some meds is good for you, keep taking it beyond the necessary amount, you overdose. It's all about control. While I'm not confident on this Fed's capability, I don't see how we can immediately jump the wagon and declare doomsday.
I *MUST* be missing something.
Parent Post
hc Wed Mar 18 15:01:19 2009 CDT #
MS says:
Summary of today's news and comments:
We're Fucked...
Off to Sebring race for some much needed R&R......
Ciao
MS
MS Wed Mar 18 14:56:38 2009 CDT #
SPECTRE of Inflation says:
I stand corrected, as the FED went for the Kool-Aid in a big way. Over one Trillion in outright Monetization, and more coming, and the market cheers it. How exactly will we ever raise rates when it puts a crushing burden on the Federal Government by way of interest payments? No wonder everyone including China is buying short term paper. The Treasury Market is $50 Trillion Dollars, so it will be fun watching the FED herd cats. We also just gave all our creditors a big finger which is why China has been so concerned as of late regarding our Treasury paper. It now seems they had good reason to be concerned.
SPECTRE of Inflation Wed Mar 18 14:56:54 2009 CDT #
ac says:
Oh yeah that was stigiliz idea -- he must be a genius too -- actually he has a nobel prize.
Robert Merton had a Nobel prize in economics too - he used it to almost singlehandedly collapse the financial system back in the 90s.
ac Wed Mar 18 14:57:01 2009 CDT #
Bob the Builder says:
Actually he did. We just didnt realize it until last year. He and his enablers created the moral hazard and Greenspan put that resulted in this gdamn stupidity. If any one tells you that we have to set Moral Hazard aside, punch them in the face.
Parent Post
Bob the Builder Wed Mar 18 16:10:21 2009 CDT #
nova says:
“"So America now has OFFICIALLY committed to HYPERINFLATION !
You'll all go to hell !
Greetings from Weimar !"
That actually made me laugh! Can't wait for the Beer Hall Putsch!
Werner was a touch grouchy. I guess this isn't working out the way he hoped.
nova Wed Mar 18 14:57:30 2009 CDT #
RockyR says:
This HEADLINE. As if the Fed has the power to "end the downturn". We have lost our collective head:
"Fed to Buy $300 Billion of Treasuries, Acquire Agency Debt to End Downturn"
http://www.bloomberg.com/apps/news?pid=20601087&sid=ai9ygzsBdynw&refer=home
RockyR Wed Mar 18 14:57:35 2009 CDT #
Haha says:
Marc Faber :
http://www.abc.net.au/reslib/200903/r350188_1604430.asx
Haha Wed Mar 18 14:58:47 2009 CDT #
bearly says:
[I'm not exactly the most vocal on this board, but I've warned before that direct monetization by the fed is exactly the reason not to touch TBT]
Monetization may be the exact reason to buy TBT.
bearly Wed Mar 18 14:59:21 2009 CDT #
ille.vir says:
Hmm. An explanation would be much appreciated. I hadn't thought of it that way.
Parent Post
ille.vir Wed Mar 18 15:05:17 2009 CDT #
CRbot says:
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CRbot Wed Mar 18 15:00:09 2009 CDT #
poic.v20 says:
"How exactly will we ever raise rates when it puts a crushing burden on the Federal Government by way of interest payments?"
WE dont raise rates. The market raises rates. The market will raise rates down the road regardless of what WE want.
poic.v20 Wed Mar 18 15:01:27 2009 CDT #
SPECTRE of Inflation says:
I agree with your thought, but was talking about the FFR which is the only instrument where they do have some control. Of course the EFFR also proves that even there, the FED has some but not absolute control. I also mentioned China moving into short term paper, and I know you understand the implication.
Parent Post
SPECTRE of Inflation Wed Mar 18 15:14:01 2009 CDT #
Max says:
So what's the lag time before wages are affected? Devaluing debt through inflation only works if wages increase. Also, by buying agencies, isn't the Fed simply increasing credit, not money supply? The money was spent when the mortgages were made, no? It's been said many times around here: increasing credit does nothing when no one wants to borrow.
Max Wed Mar 18 15:01:38 2009 CDT #
burnside says:
MS?
Is it SCCA? I have an uncle and cousins involved. As to currency, I was responding to today's move triggered by Angele Merkel/EU resistance to stimulus. I suspect race-to-the-bottom scenario now.
burnside Wed Mar 18 15:02:11 2009 CDT #
sm_landlord says:
Y'all did notice that they also announced that they will buy an additional $750 billion of MBS plus dump another $200 billion into Fan&Fred debt, right?
So that's $1.25 trillion in printing announced today.
sm_landlord Wed Mar 18 15:02:27 2009 CDT #
homedad43 says:
Nova:
I've been in and out.
Now that Werner's come to grace us again, whatever happened to Elvis? Has he left the building or is he pulling a sock puppet?
homedad43 Wed Mar 18 15:02:36 2009 CDT #
Guest says:
"Summary of today's news and comments:
We're Fucked..."
Not if you covered your shorts 2 weeks ago or prior and never was foolish enough to short long term USTs.... Why anyone would ever short a security that the goverment both issues and buys while the economy is in a deep recession is beyond me. Greed is a bitch on both the upside and downside.
Looks like the perma-bears are just as greedy as the perma-bulls were. They'll both end up in the poor house when this thing is done.
Guest Wed Mar 18 15:02:52 2009 CDT #
MS says:
Guest...this has nothing to do with being a perma _____
It's about long term ramifications that you will have to live through. It's not about day's, week's or even months. The problem here is once you start this QE you can't stop it....not with the crap floating in the system.
Key point that...
Burnside-
12 hour ALMS Race......some support races are SCCA I believe.
Ciao
MS
Parent Post
MS Wed Mar 18 15:07:52 2009 CDT #
ille.vir says:
Watched the whole Sebring 12 hours last year on my PC, great race to watch. ALMS is awesome, hope they don't go away because of the Great Recession. Have fun!
Parent Post
ille.vir Wed Mar 18 15:14:42 2009 CDT #
Guest says:
MS -
So once we start down the road of QE then we can never stop? Oh my God, you mean this is like a nuclear reation?! Yikes!
Dude, get over yourself and read some history about QE in other developed economies - or even your own country (assuming you're from here). It's happened before and believe it or not it isnt always a run away train - particularly in developed economies.
Man, these posts are so full of know-it-all pontificators it reminds me of the jokers during the internet bubble who talked about "new paradigms" like I wouldnt understand. Well, I did and do now.
I made a lot of money being short for the past 2 years, but I covered everything I had left on the short side in early March because I found the bears had become the arrogant pricks... That's been a pretty good contra-indicator for the past 30 years.
Parent Post
Guest Wed Mar 18 15:21:36 2009 CDT #
hc says:
"The problem here is once you start this QE you can't stop it....not with the crap floating in the system. "
Why can't they stop it?
If the economy does stop deflating, then it can survive a higher interest rate. At that time, can't they relax on QE and let society bear a higher than normal interest rate?
I don't see why "they cannot stop it"?
Parent Post
hc Wed Mar 18 15:32:10 2009 CDT #
SPECTRE of Inflation says:
The last bubble will blow spectacularly, and it will be because the market will demand higher rates which we will pay or face default. They have us by the short hair.
Parent Post
SPECTRE of Inflation Wed Mar 18 15:18:07 2009 CDT #
cd says:
HC
But this can also spark a short term bottom, and force previous capital jammed inside UST to participate in the market, which could then actually help us begin a new virtuous cycle. Some may debate this would cause a bubble, but that's a bit far out as a prediction, seeing our immediate worry is deflation at the moment.
From what I'm seeing, this hurts (a little) for some parties, funds and some countries -- esp those who've been fleeing and running to safety of the USD and UST.
how about it hurts the savers, not the greedy pigmen...are you not reading your on content..
this hurts the fixed income people struggling to survive...jeez..have some compassion..
not for the greedy for the savers, doers and people who didn't chase the almighty gotta be like trump disease...
cd Wed Mar 18 15:04:00 2009 CDT #
hc says:
"how about it hurts the savers, not the greedy pigmen..."
Well, the greedy pigmen companies are broke. The greedy borrowers are broke. There's a big hole waiting to be filled.
Savers have the money.
How did you think the govt is going to solve this problem? It's obvious to me from the very beginning.
If you want to be angry, you should be angry at your neighbors who're spending like crazy or squeezing into crazy mortgages back at the bubble years.
The only question that nobody wants to answer now (and we, as a society, keeps pressing the pause button on. ) Is who foots the bill, which is coming due??
The debate I see on the internet always revolves around this: Do you collect 100% from the now bankrupt banks and ex-homeowners; or do you collect 100% from innocent savers, innocent taxpayers, moral hazard, etc.
How about the answer is you collect from everyone, innocent or not, since this is bigger than everyone?
Some of the anger I see is misdirected.
We have a big fire disaster now.
Instead of being angry at the arsonists, I see people being angry at the fire that's destroying their local resources; or angry at the firefighters who're losing.
Guess what? Angry or not, the fire is happening.
Everyone is going to be hurt, moral hazard or not.
Don't know why people don't see it. I've moved beyond bargaining and anger to acceptance. I just want it to be over with. Inflation or deflation.
Parent Post
hc Wed Mar 18 15:17:39 2009 CDT #
ille.vir says:
Hm? All of us are already paying in various forms. Taxes, lower rates on savings accounts, less social services. The thing is, more spending isn't the solution, nor is artificially lowering interest rates. The firefighters aren't fighting the fire, in this case, they're throwing more wood at the problem. I think the whole issue is that people think of it as a problem that can be spent away, "who foots the bill, which is coming due??" Some things can't be solved by throwing money at it, after a certain extent, you need to let deflationary unwinding events play themselves out.
Parent Post
ille.vir Wed Mar 18 15:25:32 2009 CDT #
Anonymous says:
Because the Fed is a private bank. They don't need approval to lend money or to buy paper.
Parent Post
Anonymous Wed Mar 18 17:08:18 2009 CDT #
poic.v20 says:
"Y'all did notice that they also announced that they will buy an additional $750 billion of MBS plus dump another $200 billion into Fan&Fred debt, right?
So that's $1.25 trillion in printing announced today."
Gotta prime the pumps to buy the GSE debt that China etc.. are selling.
poic.v20 Wed Mar 18 15:04:03 2009 CDT #
Rob Dawg says:
Hyperinflation is Holmes and Moriarty at the Reichenbach Falls. Yes, you vanquish your enemy of the moment but you don't live to relish the victory.
Rob Dawg Wed Mar 18 15:04:18 2009 CDT #
Rufus the Doofus says:
So you go with the people who claim the guy in "Adventure of Empty House" was an imposter? :)
Parent Post
Rufus the Doofus Wed Mar 18 21:36:00 2009 CDT #
nova says:
Hi Homedad
Always a pleasure. No, well I don't know. Could be a sockpuppet. No sign of Elvis. Michael is interesting tho
nova Wed Mar 18 15:04:35 2009 CDT #
malcontent says:
This is nuts. Monetization will lead to inflation and high interest rates to control it. That will crush consumers who already have too much debt. This is the start of the next recession already. http://malcontentist.com/2009/03/monetization
malcontent Wed Mar 18 15:08:43 2009 CDT #
Cinco-X says:
Hyperinflation WILL NOT crush consumers with too much debt. It effectively steals money from responsible savers and pays off deadbeat's loans! It's a kinda' like the various bailouts we've been seeing recently, but they're taking the money directly out of your bank account instead of going through the IRS. Laughing and crying at the same time.....LACATST (?)
Parent Post
Cinco-X Wed Mar 18 15:51:14 2009 CDT #
Barley says:
"The Fed WANTS to reflate - they want people to worry about inflation (not deflation)."
Well then why not introduce a progressive tax system.
All houses will be taxed 5% this year, 10% next year 15% in year three. Same applies to gasoline, bread, milk,...
Barley Wed Mar 18 15:09:10 2009 CDT #
ille.vir says:
Political reality. Progressive tax scheme would get labeled "socialist" and have no chance today. Maybe after a year or two of this downturn, but not yet. The fed's been bluffing until now with the direct monetization card. Now they've been forced to use their last card. Velocity is still going to be very low, people will see prices dropping and keep "waiting until tomorrow to buy."
Parent Post
ille.vir Wed Mar 18 15:18:58 2009 CDT #
Barley says:
EHP - "withdraw the money because the system does not work that way"
They can introduce new currency. 1 new dollar ='s 10 old dollars
Barley Wed Mar 18 15:14:13 2009 CDT #
poic.v20 says:
"No... but nobody's forcing you to invest in THOSE companies? There's plenty of decent ones out there. The baby's being thrown out with the bathwater right now, and that's something worth saving. "
Ultimately there are no decent companies in a financial system based on fraud and lack of transparency. The decent companies eventually get pulled down by the weight of the crap in the system.
Look at any financial system with pervasive fraud throughout the world and tell me how well decent companies ultimately did?
How is the Russian stock exchange doing? How about the Nikkei? How about the Shanghai Exchange?
"The baby's being thrown out with the bathwater right" now by virtue of the fact that we are papering over the corruption in our financial system.
You are supporting turning a blind eye to the fraud in the system in the hope that pumping money into the system will root out the fraud.
I am saying clean out the fraud and capital will willingly flow into the system.
poic.v20 Wed Mar 18 15:16:56 2009 CDT #
Alan Greedspawn says:
Let me se if I get it: the Nubian Pharaoh hired by the Habiru is now transfering all the Empire's seeds to Canaan?
"Ein kol-hadash tachat ha-shemesh," - there is nothing new under the sun, said the Preacher.
Alan Greedspawn Wed Mar 18 15:17:34 2009 CDT #
poic.v20 says:
"Guess what? Angry or not, the fire is happening."
And you are supporting paying the arsonist to put out the fire.
"Don't know why people don't see it. I've moved beyond bargaining and anger to acceptance. I just want it to be over with. Inflation or deflation."
I want the right solution, not just any solution.
poic.v20 Wed Mar 18 15:21:05 2009 CDT #
hc says:
"Guess what? Angry or not, the fire is happening."
And you are supporting paying the arsonist to put out the fire.
Harping on Moral Hazard is going to doom us to complete paralysis and ends up hurting the preacher himself.
The way to hurt the "arsonist" is to impose future legislation. Unless you want to bring back debtor's jail or execution on bankruptcy, trying action "to punish" right now doesn't help fix the current situation.
Tanta mentioned several times that we cannot keep focusing on Moral Hazard and let our anger crowd out all possible solutions. If moral hazard is the only yardstick, then Cramdowns would not be supported by her -- instead she's a strong supporter of cram downs.
We need to thaw the paralysis. The baby is bring thrown out with the bathwater right now.
Parent Post
hc Wed Mar 18 15:28:35 2009 CDT #
no idea says:
Why is it so hard for anything related to the economy and the relatively simple actions being taken to be understood? Why can't the FOMC announce in conjunction with their decisions exactly what they are hoping to achieve? Why can't the President come out and give a speech explaining the situation and the actions being taken and what he hopes to achieve?
Why can't anyone give some simple explanations in regards to policies implemented? Why can't all you nattering nabobs agree on what these steps mean? I swear reading the comment section leaves me more confused about the outcome for our economy then when I simply read the story, research the issue and reach my own decision on what the implications will be. The comment system needs to have the comment voting enabled like at Mish's site. At least then you have a fair idea of what the majority believe when a strong opinion is set forth.
no idea Wed Mar 18 15:21:38 2009 CDT #
SPECTRE of Inflation says:
How in the Hell are they doing this without Congressional approval? >:o
SPECTRE of Inflation Wed Mar 18 15:22:49 2009 CDT #
poic.v20 says:
"Here's a hint. Japan and US still have a functioning government.
Now look at the history post hyper-inflation of China, Germany, Zimbabwe, Argentina and Russia.
Germany had a functioning government after its hyperinflation. Hitler post-inflation coup attempt was a laughable failure and landed him in prison, and the country had a fairly successful first attempt at democracy until the global collapse/deflation of '29-'32.
I'm not arguing in favor of hyperinflation...just pointing out that the historical record is seldom as simple as the board ideologues would have us believe."
Ok well with the examples I gave above.
Deflation. Successful govt. transition 2/2
Hyperinflation. Successful govt. transition 1/4
The odds are still looking bad for the hyperinflation camp. However you look at it the historical precedence for successful govt. transition post hyperinflation doesn't look too good.
poic.v20 Wed Mar 18 15:27:56 2009 CDT #
MS says:
ille-
Racing in general will muddle through this year (based on long term sponsorship contracts) but I gather next year will be very painful for it. Sports-cars have a 10 year cycle...this is the tenth year of the current cycle. Audi not running the rest of the season is going to really hurt the series. Porsche may return to the P1 class next year but that's still a big if...up until recently (with it's little hedge-fund games with VW) they have not been large enough to write-off a major program as a marketing exercise....
the last peak was in 1999 with 7 or 8 major manufacturer's participating at Le Mans......can't see that happening anytime soon.
Ciao
MS
MS Wed Mar 18 15:28:45 2009 CDT #
ille.vir says:
Lack of Audi is a big hit. I've lost interest in WRC already, and my friend, who is a big moto-GP fan (traveled to see a number of events), has started to lose interest. On the plus side, maybe the big money will go away, and the events will become a bit more interesting/accessible.
Parent Post
ille.vir Wed Mar 18 15:35:42 2009 CDT #
Gavshire Hathaway says:
hc, you argue with the conviction of someone that is long equities. I've been net neutral for 2 weeks, so I have no horse in the race. I disagree with your logic, your conclusions, and your viewpoint. Categorically.
Gavshire Hathaway Wed Mar 18 15:29:07 2009 CDT #
hc says:
"hc, you argue with the conviction of someone that is long equities. I've been net neutral for 2 weeks, so I have no horse in the race. I disagree with your logic, your conclusions, and your viewpoint. Categorically."
I'm net neutral too. Have been for a while now.
Inflation or Deflation doesn't hurt me either way.
UNRESOLVED dragging on does hurt me though (doesn't it hurt everyone else? I guess except the top 1%.), and I want things to resolve quickly.
Parent Post
hc Wed Mar 18 15:37:19 2009 CDT #
ille.vir says:
I'm invested mainly for deflation. Hyperinflation would kill me, like it would everyone else except the goldbugs. Moderate to high inflation would be fine. The steps this Fed is doing, however, makes me sad. Here are the very people who studied the depression, criticized the way the BoJ handled their problems, doing exactly the same thing leading to the same outcomes. Maybe except a bit faster. The criticism is that what they are doing is going to create a "dragging on" scenario. They're enabling zombie banks, engaging in quantitative easing, and monetizing debt. Smoothing over the real problem and just trying to deal with the symptoms. It hasn't worked, and won't work. What they are doing is exactly the way NOT to resolve it quickly.
Parent Post
ille.vir Wed Mar 18 15:46:00 2009 CDT #
hc says:
Japan is different. When they enacted QE, they created the monster that's the global carry trade. In a way, they shifted their problem to USA and forced USA to solve the problem for them.
That strategy backfired.
I won't be so quick to assume QE for USA will end up with the same result. For one thing, the current situation is unlike Japan's, where there's external working economies for capital to flee to, and end up not exerting influence in their internal economies.
The US has (by shrewd design? or just by dumb luck?) pretty much wrecked the world's economy FOR THEM; so it's the only game in town. If it does QE, there nowhere reliable for money to run to anyway, so it has to start participating in the economy (or die a slow death of indirect confiscation by the govt)
Same solution, different situation.
I don't think we'll see the dragging on anyway, simply because our citizens are not savers. The govt doesn't have that luxury to lean on and let savers "hold the line" to keep a static economic status quo.
In USA's case, our default position is to be crushed, unless we can grow faster than our debt.
Parent Post
hc Wed Mar 18 16:00:41 2009 CDT #
ille.vir says:
I think people will find themselves surprised by the frugality of the supposedly profligate US consumer. The times will change people, and create a generation of savers. In bad times, people hunker down and stop spending. This is not a cultural or national trait. It is a human trait.
Parent Post
ille.vir Wed Mar 18 16:31:28 2009 CDT #
poic.v20 says:
"We need to thaw the paralysis. The baby is bring thrown out with the bathwater right now."
I'm all for a solution. I simply disagree with the solution you support.
poic.v20 Wed Mar 18 15:30:28 2009 CDT #
cd says:
HC- Damn right I'm angry...this is not about me, this is about my daughter and all children...we are throwing them in your fire...I for one didn't play with the matches..I can't help the ones who did...So don't take my water that surrounds my castle because all the pigmen threw a burning man festival in the friggin forest....Acceptance is a weak argument..
So if an adult harms, maims or murders your kid do you accept it or go an take care of it yourself..I take care of it myself...you wait for a judge to give an animal life...we are different...
acceptance for me is knowing that person is now void of life....
cd Wed Mar 18 15:32:00 2009 CDT #
Anonymous says:
The implication is that piles of money on the sideline must be moved out of cash and money market funds to some other asset classes. In the name of price stability amid a spiraling asset price deflation, BB has to bring in his choppers. The sinking dollars also make US exports more attractive to Europe and Japan. The dollar depreciation also forces the Franco/Germany alliance into a more collaborating position than the one they have been staking out. China and Japan are already on the US side in this crisis. Wen has called the Wall Street shenanigans as gross mismanagement, while his European counterparts have characterized Wall Street greed as cancerous disease that must be excised. The ante is up.
Anonymous Wed Mar 18 15:41:20 2009 CDT #
poic.v20 says:
"
UNRESOLVED dragging on does hurt me though (doesn't it hurt everyone else? I guess except the top 1%.), and I want things to resolve quickly."
Sometimes doing the wrong thing is worse than doing nothing.
Don't you find it interesting that 2008/2009 is playing out step for step exactly as it did in the 30s? I know I do.
poic.v20 Wed Mar 18 15:44:28 2009 CDT #
Barley says:
Nice to see you back Gav. I was worried about the positions you were taking...good to stay clear for a period.
I took a bet on upside for Canadian banks - 33% in three weeks has almost paid for the stress
Barley Wed Mar 18 15:50:03 2009 CDT #
Anonymous says:
All I want to do is buy a house.
Instead I feel like I'm timing the waves at Breakneck Beach. It feels like there is no right answer. And the surf is scaring the $&#*! out of me.
Anonymous Wed Mar 18 16:01:42 2009 CDT #
Cinco-X says:
Me too; However, I'd note that
1) Dec. 1st, 2009 is the last day to get the 8k credit from the govt.
2) Higher interest rates are coming, though no one is sure when.
Don't try to time a bottom. Make a good choice that you feel comfortable with, and go-
Parent Post
Cinco-X Wed Mar 18 16:16:00 2009 CDT #
Anonymous says:
CR,
Your are dead wrong. The relationship between the 10 year and mortgage rates broke down 6 months ago. 10 year dropped to the floor...and mortgage rates barely moved. This money printing may drop 10 year rates, but it will not restore the relationship between the 10 year rates and mortgage rates.
You should know that....
Anonymous Wed Mar 18 16:13:44 2009 CDT #
Barley says:
Fudd
+2
Barley Wed Mar 18 16:26:07 2009 CDT #
Anonymous says:
Got gold? Got guns? Got groceries?
Anonymous Wed Mar 18 16:29:59 2009 CDT #
blah says:
the fed is dumb if they think lower mortgage rates will 'save' us. writedowns and lower principal on these 'assets' has to be done. yes many banks will go bankrupt, as many ppl and businesses already are. but hey, no pain no gain.
blah Wed Mar 18 16:56:21 2009 CDT #
END