Fed Monetizes 1 Trillion in MBS and Treasuries for 2013

[ktm]

Why does the Fed need to COMPLETELY exit?

Why not maintain a higher balance sheet as the new norm? People here ask how/why the Fed allowed the housing bubble to get so large. The answer is that there was nothing they could have done to prevent it.

If you have a larger balance sheet with the kinds of holdings that they currently have, then you have ability to stop bubbles from forming to the upside. The very problem of a "fast exit" that concerns them is precisely the tool that was needed in 2005...or before.

 

[piezoe]

Quote from Tsing Tao:

I would have been fine with no bailouts.

Indeed, that was the most troubling aspect for all of us, save those bailed out of course. I keep coming back to what would have happened had there been none, and it seems to be not a pretty picture. But I also come back to how the bailouts were done. That could have been done better in a way that would guarantee that no one bailed out could have profited from the bailout itself. The bonuses paid to executives that year was shameful. Yet it does seem that most, if not all, of the bailout money put up by the taxpayers will be recovered. It is a very shaky business, this second guessing, when one wasn't on the front lines and didn't have all of the information that those on the front line had.

 

[piezoe]

Quote from ktm:

Why does the Fed need to COMPLETELY exit?

Why not maintain a higher balance sheet as the new norm? People here ask how/why the Fed allowed the housing bubble to get so large. The answer is that there was nothing they could have done to prevent it.

If you have a larger balance sheet with the kinds of holdings that they currently have, then you have ability to stop bubbles from forming to the upside. The very problem of a "fast exit" that concerns them is precisely the tool that was needed in 2005...or before.

That sentence I've placed in italics is, according to Soros, wrong. What I learned from reading Soros is that the incipient formation of a major bubble is identifiable at an early stage and a full blown bubble is preventible. He makes a compelling case, and I am convinced he is right. The tools the Fed had before expanding their balance sheet were adequate had they been applied in a timely manner. Greenspan did not move to head-off disaster, but he could have done so successfully had he not believed in incorrect economic theory. Let's hope the lesson has been thoroughly learned.

 

[zdreg]

Quote from piezoe:

That sentence I've placed in italics is, according to Soros, wrong. What I learned from reading Soros is that formation of major bubbles are identifiable in the early stages and preventible. He makes a compelling case, and I am convinced he is right. Greenspan did not move to head-off disaster, but he could have done so successfully had he not believed in incorrect economic theory. Let's hope the lesson has been thoroughly learned.

piezoe, people like yourself, love inflation as it helps the debtors get from underneath their responsibilities to their creditors.
unfortunately some debtors stayed too long at the party. other debtors got themselves good lawyers and are living rent free, which should appeal to your concept of social justice.

 

[piezoe]

Quote from zdreg:

piezoe, people like yourself, love inflation as it helps the debtors get from underneath their responsibilities to their creditors.
unfortunately some debtors stayed too long at the party. other debtors got themselves good lawyers and are living rent free, which should appeal to your concept of social justice.

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[piezoe]

Tsing Tao, Hopeless' chart of labor force participation is extremely worrisome and tells us that mere improvement in the unemployment rate is not enough. We must solve this problem.

 

[HopelessTrader]

Subprime Gains 30% as Goldman, Cerberus Target Market
By Jody Shenn - Oct 4, 2012 9:43 AM CT

http://www.bloomberg.com/news/2012-10-04/subprime-up-as-funds-target-shrinking-market-mortgages.html

 

[oldtime]

Quote from piezoe:

Indeed, that was the most troubling aspect for all of us, save those bailed out of course. I keep coming back to what would have happened had there been none, and it seems to be not a pretty picture. But I also come back to how the bailouts were done. That could have been done better in a way that would guarantee that no one bailed out could have profited from the bailout itself. The bonuses paid to executives that year was shameful. Yet it does seem that most, if not all, of the bailout money put up by the taxpayers will be recovered. It is a very shaky business, this second guessing, when one wasn't on the front lines and didn't have all of the information that those on the front line had.

if you like tinkering around with conspiracy theories check out Michael Moore's "Our Love Affair with Capatilism".

A couple of members of congress who were there have a different take on the bailout. In retrospect, it was the old "weapons of mass destruction" ruse. First the bailout was agreed upon between the banks and the Treasury. And everyday it didn't pass, the consequnces of voting against it got worse and worse. It started with just probably not getting re elected, and ended with a complete collapse of the world's economy.

 

[piezoe]

Quote from oldtime:

if you like tinkering around with conspiracy theories check out Michael Moore's "Our Love Affair with Capatilism".

A couple of members of congress who were there have a different take on the bailout. In retrospect, it was the old "weapons of mass destruction" ruse. First the bailout was agreed upon between the banks and the Treasury. And everyday it didn't pass, the consequnces of voting against it got worse and worse. It started with just probably not getting re elected, and ended with a complete collapse of the world's economy.

OK, I'll read it if you'll read Howard Zinn's "A Peoples History of the United States." Is it a deal?

 

[denner]

Quote from piezoe:

Tsing Tao, Hopeless' chart of labor force participation is extremely worrisome and tells us that mere improvement in the unemployment rate is not enough. We must solve this problem.

I might be in the minority of opinion, but I think that it is completely unsolveable. Automation, a reduction in traditional "bricks and mortar", offshoring, etc, etc...it just makes no sense to hire in the US and deal with the bureaucracy...

Even if you could convince 9 out of 10 companies to hire locally, it's that 10th company that will gain the competitive edge by cutting into their labor costs and offering more attractive pricing...and they will eventually steal all the market share.