Former Fed QE guy Confesses, Apologizes: "I Can Only Say: I'm Sorry, America."

[Safilo]

Quote from Martinghoul:

The Fed did NOT bail out my industry. The Fed bailed out the banks. One could argue that my industry wouldn't exist w/o the banks, but, in that regard, we're not alone, I daresay.

Furthermore, I'm not entirely clear how I was defending a particular "industry" here. And, one thing for sure, I DON'T draw a salary courtesy of the Fed.

Some things to ponder...

Banks were bailed out, but not entirely willingly. The 'financially viable' institutions that did not need bailout money were coerced into accepting the funds because obama wanted to make it seem like all of the banks were evil entities risking honest American workers' money for their own gain, also keeping the 99% down. (gotta appreciate the irony of giving these "evil banks" more taxpayer money as a "fix")

Secondly, the obama admin did not buy the toxic assets, instead they took an ownership stake in the banks themselves. This is a pretty basic play out of the "how to build a left-wing dictatorship playbook" - gain control of the country's wealth and banking system, thus controlling who gets money and for what without having to go to congress.

Quote from Martinghoul:

Well, before we get to that, I wanted to make sure that I understood a couple of things that you mentioned. Specifically, QE has no value because "it's not like a factory that produces goods". Then you mentioned that "money has no value and represents debt". Are these accurate and do you believe in these statements?

You keep rephrasing what was said as a question but avoid responding. If you disagree with what I said, explain why. If you think money itself has value go ahead and educate us. I'm sure I am not the only one who is dying to know how "wrong" I am.

 

[Scataphagos]

Quote from Safilo:

"... Pretty much... They may be thinking along the lines of "if nobody notices how bad things really are maybe they'll continue doing business as usual" and so far it's working.

We're all like the proverbial "frogs in a pot".

 

[drownpruf]

Quote from Safilo:

Banks were bailed out, but not entirely willingly. The 'financially viable' institutions that did not need bailout money were coerced into accepting the funds because obama wanted to make it seem like all of the banks were evil entities risking honest American workers' money for their own gain, also keeping the 99% down. (gotta appreciate the irony of giving these "evil banks" more taxpayer money as a "fix")

Secondly, the obama admin did not buy the toxic assets, instead they took an ownership stake in the banks themselves. This is a pretty basic play out of the "how to build a left-wing dictatorship playbook" - gain control of the country's wealth and banking system, thus controlling who gets money and for what without having to go to congress.



You keep rephrasing what was said as a question but avoid responding. If you disagree with what I said, explain why. If you think money itself has value go ahead and educate us. I'm sure I am not the only one who is dying to know how "wrong" I am.

You mean the warrants issued to the treasury under TARP, which was enacted under the EESA of 2008 which passed the House and Senate as HR 1424 and was signed into law by GW Bush in October of 2008.

You are w/o a doubt the dumbest mofo alive. Seriously dude, just stop f*cking typing.

 

[Martinghoul]

Quote from Safilo:
Banks were bailed out, but not entirely willingly. The 'financially viable' institutions that did not need bailout money were coerced into accepting the funds because obama wanted to make it seem like all of the banks were evil entities risking honest American workers' money for their own gain, also keeping the 99% down. (gotta appreciate the irony of giving these "evil banks" more taxpayer money as a "fix")

Secondly, the obama admin did not buy the toxic assets, instead they took an ownership stake in the banks themselves. This is a pretty basic play out of the "how to build a left-wing dictatorship playbook" - gain control of the country's wealth and banking system, thus controlling who gets money and for what without having to go to congress.

Huh? Obama? As noted in another post, this is really a very bizarre thing to say...

You keep rephrasing what was said as a question but avoid responding. If you disagree with what I said, explain why. If you think money itself has value go ahead and educate us. I'm sure I am not the only one who is dying to know how "wrong" I am.

Well, you initially made some statements which I found strange, so I was asking you about them. As to money having value, seems like it does to me. I can buy stuff with money. If that ain't your definition of "value", you might need to narrow it down for me.

 

[brokerboy]

i am saying corporate stock share holders and top executives have benefited. i don't think the small employee has benefited because i don't think wages grew in years. the earnings are coming from cost cutting or refinancing. there has been no sales growth. when you spend less someone else is being paid less. the corporations don't invest into the business they buy back the stock or raise div.

Quote from Martinghoul:

So are you saying then that pretty much all businesses and their employees have benefited from Fed's QE?

 

[Martinghoul]

Quote from brokerboy:
i am saying corporate stock share holders and top executives have benefited. i don't think the small employee has benefited because i don't think wages grew in years. the earnings are coming from cost cutting or refinancing. there has been no sales growth. when you spend less someone else is being paid less. the corporations don't invest into the business they buy back the stock or raise div.

So, basically, you're suggesting that QE has helped corporate America, as well as various shareholders, such as employees who had been partly paid in shares, pension plans etc?

 

[jem]

QE and all the other govt and private FED bank intervention...probably short circuited what probably would have been a quick and cleansing reset.

Is allowing the govt to continue to overspend doing anyone any good in the long run?

Is bailing out too big to fail banks and zombie really a smart thing for society as a whole?

Instead of creative destruction with have too big to fail cronies.

In the heorin dealer doing his victim a service by giving him heorin easing?

 

[eurusdzn]

Last couple auctions of 5 and 10 year notes have been snapped up by directs,
and derilects, leaivng low 30ish percent for the primary dealers. I take that as the market saying. " this is the best rate you are going to get for some time now. 2.7ish on the 10."

If the funding requirements for this fiscal year are 700-800 billion and just say the fed purchases remain unchanged through 2014(500 billion notes) there does not seem to be enough supply of newly issued notes to buy back from the primary dealers. It isnt just 5-10s auctioned throughout the year.
The fed would not want to buy old, more expensive, high yeilding notes back from the banks would they?
Simply the supply and market mechanics that i ASSUME here should signal lower rates
For 2014.
I realize markets will discount an eventual taper , as we have seen, but after reading the article of the whistleblower trader posted here i dont think i am way of the box here..
Also, long notes are a good hedge and proxy for volatility(Maverick74) if we get nose bleeds up here on stocks.
Please, correct/clarify any/all wrong assumptions I have about how the fed and their
Purchase/tradng program works. I would like to know more.

 

[Martinghoul]

Quote from eurusdzn:
Last couple auctions of 5 and 10 year notes have been snapped up by directs,
and derilects, leaivng low 30ish percent for the primary dealers. I take that as the market saying. " this is the best rate you are going to get for some time now. 2.7ish on the 10."

If the funding requirements for this fiscal year are 700-800 billion and just say the fed purchases remain unchanged through 2014(500 billion notes) there does not seem to be enough supply of newly issued notes to buy back from the primary dealers. It isnt just 5-10s auctioned throughout the year.
The fed would not want to buy old, more expensive, high yeilding notes back from the banks would they?
Simply the supply and market mechanics that i ASSUME here should signal lower rates
For 2014.
I realize markets will discount an eventual taper , as we have seen, but after reading the article of the whistleblower trader posted here i dont think i am way of the box here..
Also, long notes are a good hedge and proxy for volatility(Maverick74) if we get nose bleeds up here on stocks.
Please, correct/clarify any/all wrong assumptions I have about how the fed and their
Purchase/tradng program works. I would like to know more.

It's really rather premature to draw conclusions about the bond mkt of 2014 based on a couple of auctions (and I have no idea what "derilects" are, either).

That said, you're absolutely correct in suggesting that, if QE3 continues at $85bn/month AND, at the same time, the deficit keeps shrinking as predicted, the Fed will be absorbing all of the new issuance at some point in 2014. Does that signal lower rates? All else being equal, yes, but all else is not equal.

I am not entirely sure what you mean by "long notes being a hedge and proxy for volatility".

 

[eurusdzn]

Jeez, an unintentional slip where i meant "directs" rather than "derilects"

As to the hedge and proxy volatility suggestion i guess i mean two, yet not entirely seperate things.

It shouldnt be this way but it has been for five years now that in a rising stock market , US T- notes and bonds have also risen together. Stocks and T's , for 5 years have been been positively correlated so that long SP500 and long US treasuries as a somewhat spread trade have provided some market neutrality
and a smooth equity curve. Havent plotted these two together for a while but it was a smooth equity curve prior to taper fears and sould have resumed as of late.
I guess it has been like having your cake and eating it as well where in rare crisis times you have your hedge a correlation goes quite negative and in most other times both legs of the longs are making money as correlation is positive.

The neutrality is also somewhat supported by bonds being bid on daily run of the mill
poor economic stats where stocks will be sold and bonds bid , however, that is hard to measure for me in the "good is bad and bad is good times we are in."

Finally, and not at all seperate from above is the "flight to quality" . The strong bid in US treasuries diring crisis may be a reasonable proxy for a long volatility trade as risk sells off.
Despite any naysayers of the quality of the US issued paper and the US dollar i bet that "old ways" will prevail next time as well during crisis. I will want to be long Treasuries.

Hope that clarifies , somewhat, my previous post.I really just mean that long both stocks and bonds veiwed as one position has been a good trade for years .Any comments welcome.