Pimco and Blackrock say QE3 on the way....

[Scataphagos]

Fed will likely try some form of QE3...

1. Won't work as they hope.

2. Market will rally some on it, but likely less vigorously than on QE2.

At some point, the world will recognize "QE doesn't really work because our major fundamental problems are not related to money supply and availability of credit".

 

[Tsing Tao]

Quote from atticus:

Politically untenable.

+1

Obama would be cooked (if he isn't already) with a QE3 style inflationary rise - particularly in the price of gas/oil.

 

[m22au]

QE3 will happen, it's just a matter of when.

Maybe not next week and maybe not this month.

But give me S&P 500 down 15% from the peak and 10% unemployment, and I'll give you QE3.

My view would only change if Bernanke is no longer chairman of the Fed.

 

[achilles28]

Quote from Tsing Tao:

+1

Obama would be cooked (if he isn't already) with a QE3 style inflationary rise - particularly in the price of gas/oil.

As opposed to...?

The alternative is bleeding jobs and markets. Which is more untenable? A "hidden tax" or a deluge of bad press from sliding employment?

 

[Tsing Tao]

Quote from achilles28:

As opposed to...?

The alternative is bleeding jobs and markets. Which is more untenable? A "hidden tax" or a deluge of bad press from sliding employment?

It's a tough choice, to be certain. But I think the dollar and inflation are too fragile to go out printing again.

 

[atticus]

Stimulus, of any kind, is completely abhorrent to Congress at this time. There isn't a chance in hell that QE3 is announced in 2011.

 

[m22au]

Quote from atticus:

Stimulus, of any kind, is completely abhorrent to Congress at this time. There isn't a chance in hell that QE3 is announced in 2011.

Would you change your mind if the S&P 500 went below 1,000 and unemployment was at 10% and non-farm payrolls losing jobs for two months in a row?

 

[atticus]

Quote from m22au:

Would you change your mind if the S&P 500 went below 1,000 and unemployment was at 10% and non-farm payrolls losing jobs for two months in a row?

Congress won't. Nobody from the House has called to ask my opinion. Use of the hypothetical(s) are a means to reinforce a bias. I am not attacking you, but I will assume you're net-long and talking yourself deeper into your positions.

 

[kashirin]

Quote from m22au:

Would you change your mind if the S&P 500 went below 1,000 and unemployment was at 10% and non-farm payrolls losing jobs for two months in a row?

higher unemployment was a direct result of QE2
so if we want even higher unemployment then we can embrace QE3

 

[achilles28]

Quote from Scataphagos:

Fed will likely try some form of QE3...

1. Won't work as they hope.

2. Market will rally some on it, but likely less vigorously than on QE2.

At some point, the world will recognize "QE doesn't really work because our major fundamental problems are not related to money supply and availability of credit".

Clearly QE works to stabilize equity markets and employment, at least in the short term. Otherwise, the recent sell-off/lay-offs since the end of QE2 (July) wouldn't have occurred. Nor would the V-bottom reversal of 2008 occurred without unprecedented FED intervention. I would say to the contrary, our fundamental economic problems are related to money supply and demand driven credit. The private sector is in the middle of a giant deleveraging cycle which killed loan demand and created huge deflationary pressures in asset markets. The Government and FED stepped in to offset private sector deleveraging with massive deficits and QE. I'm not arguing the case for additional quantitative easing. It's a band-aid, and an effective band-aid at that (depending on perspective). I'm merely arguing the merits of that quote. Like most people here, I would love to see the end of all QE, deficits and take the pain. But honestly, look at Bernackes track record. He's 1000% opposed to any deflation. In his mind, deflation is the number#1 threat to stability. He's a total dove, owned by Wallstreet. The only leverage Washington has is his Chairmenship comes up for renewal in 2014. Does anyone here think voters prefer 30% unemployment over high gas prices...? Didn't the recent debt deal prove that? Americans overwhelming supported bipartisan compromise to increase the debt ceiling, despite widespread opposition and outrage against an even higher national debt. When confronted with a meltdown scenario, Americans chose their handouts and jobs over principle. Everyone loves to rail against the debt, as long as doing something about doesn't effect them. Nobody wants to take the pain. The politicians know this and will act accordingly, imo.