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Global Economy Bursting?

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Well it looks like QE3 is part of the plan and the Bernak "kinda" mentioned it during his Q&A. That is why the market shot up today. The market was set up for a pull-back but may have to wait and 1350 on the SnP may be game with a couple of rallies. But we may also be at an inflection point.

I'm still holding on to my short positions. I think many covered their shorts today with the mention of 2.5v QE3 and why the market took off.

Interesting fact today this morning. There were no Short Positions available for the SPY. What does that tell you? Now we have to wait a couple more days for a pull-back.
 
Randolph Kinney said:
Fed Signals That a Full Recovery Is Years Away

http://www.nytimes.com/2012/01/26/b...te-2014.html?_r=1&nl=todaysheadlines&emc=tha2

The Federal Reserve, declaring that the economy would need help for years to come, said Wednesday it would extend by 18 months the period that it plans to hold down interest rates in an effort to spur growth.
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Since the administration and FED can not stimulate the economy and produce real jobs (which is not the gov't job), the only thing they can stimulate is the Stock Market. While the big fat happy banks are collecting bonuses and revenue from FED money to use on the stock market, the retirees look into their pockets, they wonder how they are going to make it along with many other folks that are unemployed or low wage job.
 
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Workbox said:
Since the administration and FED can not stimulate the economy and produce real jobs (which is not the gov't job), the only thing they can stimulate is the Stock Market. While the big fat happy banks are collecting bonuses and revenue from FED money to use on the stock market, the retirees look into their pockets, they wonder how they are going to make it along with many other folks that unemployed or low wage job.
Click to expand...

All one has to do is look at Japan. They have had QE going on since 1980. The have a 200% debt to GDP ratio and retarded growth; debt is and has been growing faster than the economy. The U.S. has entered into the Japanese syndrome of near zero interest rate trap. They can't afford to raise interest rates or allow interest rates to rise. More and more tax revenue goes to service the interest cost on the debt. Less and less is available for government services. Printing the money is the only option and a devaluation of the currency.
 
When housing prices were going through the roof I knew there was a limit at which the stuff would hit the fan. The limit was when prices out striped income. There is a limit to running the government offf borrowed money. The limit is when the interest on the debt exceeds raises in income. There is a limit in devaluing the currency. The limit is when the rate of inflation grossly exceeds rises in productivity and income. We are approaching the critical margins of the limits. Debt and inflation are additive and so the end may be sooner rather than later.
 
Fee, Fi, Faux . Keynesian

.... the faux world ... the faux economies ... faux speeches .......


..... I smell the blood of a Keynesian ....

.... what real?

.... not even people are real ......

.... zombie's grown ..... and sent to the trough .......

... oh how we are grass and flowers but for a moment .....
 
Keynes gets a bad rap...by the likes of Krugman and Alan Blinder...even he recognized the role of debt. Simply outspending the world and driving the interest rate to zero is classic monetarist - a flawed policy. As Japan enters its 3rd "lost decade", we can look in this nation to having a long term economic downturn that hurts those who were the most risk adverse and should have been the ones who have the most secure futures. This is basically forcing them to take huge risks at a time in life that they need to reduce risk while reward a major player in the mess (banks) with free money and carte blanche to go right back and start a new bubble in something else
 
The problems we have are not being solved with the traditional means of government spending and bank lending.

The banks are not lending so it becomes problematic of creating excess bank reserves by the FED. The money gets lent back to the government instead of the private sector so that the private sector does not grow or benefit from this mechanism.

The military spending is being reduced (government spending). The 4Q GDP came in at 2.8%. Military spending was down 7%, the impact of the Iraq withdrawal. Going forward, $700 billion is being cut from the military both in the way of manpower and hardware. Reducing the head count means a higher unemployment number and reduced spending.

Super low interest rates means that tax revenues can't grow even with lower tax rates so tax rates must increase.

The economy is being strangled with other problems that are self-induced. We choose to have higher fuel cost. We choose to have a massive trade deficit. We choose to have a massive social system that makes up for the lack of income and savings where we tax the productive private sector and transfer that money to food stamps, unemployment payments, Medicaid and the earned income tax credit.

Why is it that 47% of the population pays no federal income tax? Because they are getting benefits to make up for the lack of income.

The current political environment guarantees that nothing will be done so it is all up to the federal reserve to continue to print money and keep interest rates at zero as the only means of stimulating the economy.
 
The Zero Decade

The Fed doubles down to reflate the housing market

http://online.wsj.com/article/SB10001424052970204661604577184681681677286.html

The Fed is straining to deliver the asset-price "stimulus" that Mr. Obama can't any longer get out of Congress.

That's the best way to understand the FOMC's remarkable announcements on Wednesday, followed by Mr. Bernanke's quarterly press conference. The central bank had already promised to keep short-term rates near-zero through most of 2013, but now it feels the need to assure investors it will keep them there through the end of 2014. That would be six years in total, more than half of what may eventually become known as the Fed's Zero Decade.

Mull that one over: The Fed is declaring that it needs to run the same super-easy monetary policy when the economy is growing by 2% or 3% as it did amid the worst of the financial panic. And keep doing it past the horizon. The unavoidable implication is that the Fed doesn't think the economy will grow any faster until what would be halfway through Mr. Obama's second term. The other implication is that the Fed has no idea what to do other than to push even harder on the monetary accelerator. Maybe this time, it hopes, the economy's clutch will engage.
 
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