atticus, come on. Firstly, will you please answer my question? Secondly, as we all know, realistic solutions are rarely the same as perfect solutions. Yes, I agree with you that QE2 is hardly optimal, but it's a compromise among very many different interested parties.Quote from atticus:
I realize the problem is too big to float the Ts to the public, but I do take issue with buying the top in every market in which they choose to manip. Japan, USA, and the Swiss as you previously mentioned. These taxpayer investments are not going to be held to maturity, so it's analogous to Pablo Escobar sitting in a mountain hideout and burning bricks of 100s to stay warm.
If you're not buying 30s, then why should we be forced to? I like to get kissed when I get f*cked. Being coerced to buy Treasuries doesn't sit well, and not simply because I am unaware of the vig that GS, et al, are charging.
Quote from Martinghoul:
atticus, come on. Firstly, will you please answer my question? Secondly, as we all know, realistic solutions are rarely the same as perfect solutions. Yes, I agree with you that QE2 is hardly optimal, but it's a compromise among very many different interested parties.
At any rate, forget QE2. My question was generally in reference to continued monetary stimulus, rather than the specific method by which said stimulus is being administered.
Not mine, they ain't... Merv's (mis)managing mine at the moment.Quote from atticus:
I thought I did. OK, law of diminishing return. The manner in which they effect the stimulus is critical (to ME). It's not a bunch of Amish raising a barn. These f*ckers are grossly and criminally mismanaging your sizable tax payments.
Quote from Martinghoul:
Not mine, they ain't... Merv's (mis)managing mine at the moment.
Fair 'nuff, though, I see your point. Would it be accurate to say that, if, hypothetically, they had chosen a "better" way to administer the stimulus, you wouldn't find it objectionable? So if they were in the mkt buying more MBS, say, and 30s, you wouldn't have a beef with that, in principle?
Quote from atticus:
In principle, correct. Not mortgages specifically, but sure.
Quote from sjfan:
Okay, but if the point is to great an asset bubble (*), then why does it matter if it's MBS or long bond, or short bonds? In fact, wouldn't another large scale purchase of MBS effective crush the liquidity that market while the disruption to the treasury market is far less?
(*) In some sense, we (include the Fed) can concede that it is trying to create an asset bubble by reducing short term rates to nothing; The logic is that an asset bubble created by speculative exuberance results in a recession while an asset bubble created by financial leverage results in a far far worse recession or even a depression. So the Fed chooses the lesser of the two evils.
Quote from atticus:
I am not intentionally obtuse, but I contend that they are both speculative and leveraged. An error of omission is not a tacit agreement. I would probably move to DC with a .300 Win Mag if they started buying BOFA's paper.
I would be far less obnoxious, lol, if they were attempting to make sound macro decisions. The remind of a CME local I knew who was trading a Eurodollar model with implied pricing over par. Didn't work so well.
I'll stop with one analogy and a final thought. You don't pour gas on a fire. And if so, insure the f*cker first. Whatever they are doing isn't working.
Quote from sjfan:
Frankly I think you are intelligently arguing a useful point. I wish more ET threads go this way.
Why do you think QE2 is creating a leverage bubble. By any measure, neither consumer, or indutrial, nor financial sector leverage is high (or even growing at all). The latest few Sr Loan Officer Survey confirms the point.
Asset allocation to equity where not made on leverage, but from outflows from fixed income.
Finally, economic stats do look to be improving. I'm not arguing that this is necessarily due to QE2, but certainly it doesn't argue that it has failed.
Quote from atticus:
Truly my biggest hang-up is the lie that is QE2 and the inability to at least allude to making a profit. Lose money in the Treasury scheme, but short the Euro or something. Let us believe that you're not simply throwing the $ in the toilet. I have no problem with infrastructure stimulus as long as it's 100% Federal programs. The States make the Fed look like a team led by Einstein and Bohr.