Post QE2 world: QE3 Imminent?

laxmaster92

I just read an interesting WSJ article hinting at another round of quantitative easing. What are everyone's thoughts?

WSJ Article

derryb

Fed is setting the stage for a major decline in equities and commodities in hopes that investors seek safe haven in T Bonds. CME's recent lowering of T Bond margins will help pave the way for an increase in T Bond demand.

calleocho

Its hard to see how they would sell another round of QE to the public and the new tea flavored congress.

However if it happened and if it is north of half a trillion dollars there would some fairly powerful consequences that would distort markets far beyond those in the USA.

jmski52

in hopes that investors seek safe haven in T Bonds.

in hopes that investors seek safe haven in T Bonds.

in hopes that investors seek safe haven in T Bonds.

in hopes that investors seek safe haven in T Bonds.

BINGO!

That explains China's move from short term to long term. China will get a payoff, American debt holders will be the last ones in. Interest on the national debt will stay low and be deferred with the migration towards long bonds, as dumb as it seems. What's next, 100-year maturities?

Geithner's a nasty piece of work, isn't he?

And Americans will be stuck, worse than we are right now.

johnny9434

omg this isint gonna be good

renman95

<< <i>in hopes that investors seek safe haven in T Bonds.

in hopes that investors seek safe haven in T Bonds.

in hopes that investors seek safe haven in T Bonds.

in hopes that investors seek safe haven in T Bonds.

BINGO!

That explains China's move from short term to long term. China will get a payoff, American debt holders will be the last ones in. Interest on the national debt will stay low and be deferred with the migration towards long bonds, as dumb as it seems. What's next, 100-year maturities?

Geithner's a nasty piece of work, isn't he?

Comrade, it's not going to stick. You have to repeat it 6 times for people to get on board.


And Americans will be stuck, worse than we are right now. >>

ksammut

<< <i>in hopes that investors seek safe haven in T Bonds.

in hopes that investors seek safe haven in T Bonds.

in hopes that investors seek safe haven in T Bonds.

in hopes that investors seek safe haven in T Bonds.

BINGO!

That explains China's move from short term to long term. China will get a payoff, American debt holders will be the last ones in. Interest on the national debt will stay low and be deferred with the migration towards long bonds, as dumb as it seems. What's next, 100-year maturities?

Geithner's a nasty piece of work, isn't he?

And Americans will be stuck, worse than we are right now. >>



The second the Chinese get a whiff of inflation in the US, they will bail out of the long term treasuries too as inflation will destroy their principal.

If the FED's plan is to knock the stock and commodity markets and they are successful, it will be brief as politicians will be screaming for more easing. A falling stock market would scare the hell out of them and their re-election bids. We are going into the political season and that trumps everything.

Keep some powder dry over the next couple of months and maybe you can purchase PMs a little lower. Personally, I will continue to buy more each week as my crystal ball is always cloudy.

renman95

The ChiComm's have been exiting in a big way. Everyone sees it, it's just the calm before the storm.

jmski52

The second the Chinese get a whiff of inflation in the US, they will bail out of the long term treasuries too as inflation will destroy their principal.

The immediate impact of a big selloff in longterm US Debt securities would be a financial panic and a crash in every single market - housing, bonds, stocks, and commodities. Cash would benefit until values adjusted to reality, and that would also depend on how much cash got created during the next "fix".

I don't see why the Chinese would move 97% of their holdings into long term Treasuries without a reason. That reason has to be - that they expect to profit or else they expect to benefit in some other strategic way that is worth more than $800 billion.

If the FED's plan is to knock the stock and commodity markets and they are successful, it will be brief as politicians will be screaming for more easing. A falling stock market would scare the hell out of them and their re-election bids. We are going into the political season and that trumps everything.

The Fed's capricious money policies seem similar to JPMorgue's manipulation of the silver market. Every time the Fed jerks stockholders and bondholders around, a percentage of them panic and sell at a loss. It's the fleecing of America and the systematic destruction of the middle class via a frontal attack on their main savings - housing and securities. The only ones benefiting are the bankers and politicians that they own.

derryb

<< <i> I don't see why the Chinese would move 97% of their holdings into long term Treasuries without a reason. >>


Kicking the can down the road, hoping US overcomes its economic woes by then. It's their only hope.

storm888

<< <i>

<< <i> I don't see why the Chinese would move 97% of their holdings into long term Treasuries without a reason. >>


Kicking the can down the road, hoping US overcomes its economic woes by then. It's their only hope. >>



//////////////////////////////

Yup.

As Trump repeatedly notes, the US holds most of the cards in
that relationship.

The Chi-Com's move signals "confidence" in the US and makes it
easier for the US to attract new suckers. China certainly benefits
by helping to keep the kite up in the air.

................

More QE will not hurt/kill most of the folks here. Making friends with
calamity is somewhat doable, for folks who play with metals.

ksammut

<< <i>The second the Chinese get a whiff of inflation in the US, they will bail out of the long term treasuries too as inflation will destroy their principal.

The immediate impact of a big selloff in longterm US Debt securities would be a financial panic and a crash in every single market - housing, bonds, stocks, and commodities. Cash would benefit until values adjusted to reality, and that would also depend on how much cash got created during the next "fix".

I don't see why the Chinese would move 97% of their holdings into long term Treasuries without a reason. That reason has to be - that they expect to profit or else they expect to benefit in some other strategic way that is worth more than $800 billion.

If the FED's plan is to knock the stock and commodity markets and they are successful, it will be brief as politicians will be screaming for more easing. A falling stock market would scare the hell out of them and their re-election bids. We are going into the political season and that trumps everything.

The Fed's capricious money policies seem similar to JPMorgue's manipulation of the silver market. Every time the Fed jerks stockholders and bondholders around, a percentage of them panic and sell at a loss. It's the fleecing of America and the systematic destruction of the middle class via a frontal attack on their main savings - housing and securities. The only ones benefiting are the bankers and politicians that they own. >>



The FED, with their dual mandate, is under so much pressure to maximize employment, they will not intentionally do anything to hurt the markets. A crash in the markets will guarantee a depression and much higher unemployment. QE3 will happen sooner than most are thinking. They have no choice.

Higher unemployment means lower tax revenues, more strain on entitlement programs, lower housing prices, etc. They may wish that US investors buy more treasuries but any move into treasuries will only be temporary as funds will look abroad or find other investments to try and give their fund holders higher returns.

Again, the FED is trapped and has no choice but to print and print some more. America has to go on an austerity plan - a very painful austerity plan. That is our only hope.

The Chinese can be patient and keep us afloat by holding on to our long-term treasuries. What's in it for them? When the dust settles they will win the economic war without having to fire a shot militarily. The extra time they give us now benefits them as it gives them more time to stock up on commodities and materials they will need. Will it hurt their economy significantly if we fall into a depression and no longer are the economic strength we once were - Absolutely but my guess is they believe that is going to happen and they are preparing for it. The world will suffer but with all crashes, you want to be in a position to make the most of it when the dust settles.

Follow the money as they say. China is stockpiling for future growth. They now encourage their people to invest in PMs. They are looking at a new reserve currency to replace the dollar. They are making the moves that someone who wants to be eventually be on top should be making. All this while the average American does not have a clue about the severity of what is happening.

Call me doom and gloom but sometimes it is better to face reality even if it is scary and do something about it. I fear our politicians and our citizens will not be willing to do what needs to be done. We will wake up one morning, like we did with the banking crisis, and find that we should have done things differently. Unfortunately, there will be no silver bullets this time. The Fed and our government will not be able to kick the can down the road. The road ends at the cliff.

edmundfitzgerald

Coyn

<< <i>America has to go on an austerity plan - a very painful austerity plan. That is are only hope. >>



Like thats gonna happen. All the talk is just noise. We will continue on this path until the system cannot continue then we will hear the same crap we heard in 2008..................No one saw this coming?.....how could we have known?


QE3 will not be named such, it will just be the new norm

cohodk

<< <i>Its hard to see how they would sell another round of QE to the public and the new tea flavored congress.

However if it happened and if it is north of half a trillion dollars there would some fairly powerful consequences that would distort markets far beyond those in the USA. >>



They wont be able to see it. Banks and pension plans would be the buyers of US debt, just as in Japan.

And yes, QE I & II have distorted markets far beyond the US borders.

pf70collector

ollow the money as they say. China is stockpiling for future growth. They now encourage their people to invest in PMs. They are looking at a new reserve currency to replace the dollar. They are making the moves that someone who wants to be eventually be on top should be making. All this while the average American does not have a clue about the severity of what is happening.

So if the U.S. and European Economies collapse who will buy China's goods. Canada, Australia, Switzerland....Not nearly as big of a market as the U.S.

RobertS

What a great discussion!!!! With all the uncertainty what is the play? What I am reading here is that the short term play is to be liquid and have funds for when the possible correction happens, then re-invest in precious metals. How about long term, sit tight? Continue buying precious metals a little here and a little there and wait things out?

ksammut

<< <i>ollow the money as they say. China is stockpiling for future growth. They now encourage their people to invest in PMs. They are looking at a new reserve currency to replace the dollar. They are making the moves that someone who wants to be eventually be on top should be making. All this while the average American does not have a clue about the severity of what is happening.

So if the U.S. and European Economies collapse who will buy China's goods. Canada, Australia, Switzerland....Not nearly as big of a market as the U.S. >>



No doubt that China will be hurt bad as the Western world will not be able to purchase their products to the degree we do now. My guess, China is at least planning for that contingency. Everyone will be hurt around the world but those who are planning for the worst will have a better chance of being the new economic leader when the recovery begins.

I have no idea on how things will play out. All I know is that we cannot go on living on credit and expect our government to provide for us. Just as China is planning for the worst case scenario, all of us here in the States should be protecting our assets and have contingency plans for ourselves and families.

cohodk

All I know is that we cannot go on living on credit and expect our government to provide for us.

Thats a very nice statement of deflation.


all of us here in the States should be protecting our assets and have contingency plans for ourselves and families.


I believe there are very, very few prepared for deflation. Maybe they be prepared for inflation, but not deflation.

Baley

how does one prepare for inflation? It seems like one should borrow to the hilt, and repay in inflated dollars that are just so easy to get, as they're "falling from helicopters"

how does one prepare for deflation?? is it the opposite? hoard cash money and wait for the purchasing power of those dollars to increase as they become scarce?

cohodk

<< <i>how does one prepare for inflation? It seems like one should borrow to the hilt, and repay in inflated dollars that are just so easy to get, as they're "falling from helicopters"

how does one prepare for deflation?? is it the opposite? hoard cash money and wait for the purchasing power of those dollars to increase as they become scarce? >>




Yup, pretty much.

One comment about your last sentence...Dollars are already scarce. Talk on the boards here is that 43 million Americans (some say more) eat via foodstamps. Clearly they dont have dollars. I posted a link last week that showed that 70% of people couldnt come up with $2000 in a week. Clearly they dont have dollars. 28% of home owners have negative equity. Clearly they have no dollars in that piggy bank. I saw today where 30% --up from 14% last year-- of those with 401k's are tapping them. Soon they will have no dollars.


Got dollars?

http://www.dailymail.co.uk/news/article-1385309/Number-U-S-home-owners-negative-equity-jumps-peak-levels-house-values-plummet-fastest-rate-2008.html

http://www.smdailyjournal.com/article_preview.php?type=business&title=Workers%20too%20often%20tapping%20401(k),%20not%20a%20piggy%20bank&id=160394