|Recession? 21-Dec-11 09:06 pm |
We are in a recession, it never ended.
There never was a recession at least not since 2008. A recession refers to the result of placing a constraint on excess GDP growth. That didn't happen.
What did happen was an agreed upon stoppage of activity due to fear of money soundness. The fear came from a bust in public speculation in RE.
After the bust and acceptance of stoppage the economy reverted back to its true equilibrium. At equilibrium since every aspect of US society has been distorted by socialism work is undermined, and this results in stable equilibrium unemployment around 9%. The 91% are doing pretty well because there's no overt inflation, and one sees this in the packed malls.
Re: Ben must do QE3 soon
At some point they are going to have to do something
Nope. The economy is in employment equilibrium. "They" can do nothing. If they try, they'll only make things worse.
other than buy worthless paper, and figure how to put people to work.
This is 'crat thinking. Some authority has to do something. That attitude assumes people are helpless. Such an assumption is at the root of the problem of slow growth and is contrary to what it is to be an American.
The only people that QE helps is banks and some traders.
In fact, none of the QEs have done what you suggest. QE1 was applied only to remove toxic assets off bank balance sheets so that the banks could operate. QE2 was an attempt to increase the monetary base to stimulate final demand. However, just because there's more money available to borrow, doesn't mean people will borrow it. Not when they're fearful about the business punishing conditions that arise from the socialism the 'crats seek to apply.
I bet 2012 will be the biggest year ever for bankruptcies.
Most likely you're wrong with the proviso there's no Hormuz event.
Re: How many more millions spent buying Euros tomorrow by the ECB?
They better save some money for the run on the banks in euroville.
Nope. No run at this time. The threat that was developing was one of liquidity, not of solvency. "liquidity" here means the ability to borrow funds overnight in size under the assumption that the funds will be restored next day. Solvency preempts satisfactory liquidity since funds can't be gotten at any price. Runs develop primarily when solvency is at issue, and can develop if a state of illiquidity persists. This is what was happening until Draghi + G6 CBs waded in and reliquified 500+ EU banks. When, if, or until, those banks run down the dough and their respective economies fail to apply discipline, one can assume a flow back to normalcy. This should be seen in a correction in EuroBOR, and more noteworthy in weak sister's sovereigns. I expect to see weako's CDS come in too.
Re: Ben must do QE3 soon
There is absolutely no justification for QE3.
Keynesians don't think like you or me. They believe in eternal prosperity. Such prosperity needs continual pumping since it can't stand on its own. FED staff is dominated(99%) by Keynesian demand management types.
Markets are doing very well,
This statement contradicts your claim that's there's no justification for QE3. Seemingly, you may think it affirms it, but the affirmation makes the tacit assumption that QE3 isn't occurring when, in fact, it is. Every day FED buys anywhere from $2B - $5B in Permanent. You see, they sterilize the purchases out the back door through bill and note sales, so markets don't go berserk with the kindling of rational expectations for inflation.
Market are self directed
Then how could you expect that QEx could have any effect? Do you think "self directed markets" can be fooled? After all, "markets are doing well" may only be possible with the inevitably destructive ongoing sterilized QEx, as long as they will! To make it a little more transparent, the sterilization will start to bite by causing the ff rate to advance to the prime credit rate. That would be attended by notably increased economic activity. If that's the case and if the stock market anticipates such, then the stock market will advance, and,
I lost money in the stock market today,
you should hold or retake.
Re: Ben must do QE3 soon
Backdoor QE? More like Euro Banks that had nowhere else to turn.
Backdoor QE has nothing to do with EU. When FED buys Permanent in the NY bond market, as it were, actually through the dealer network, it has to sterilize the purchases so that they have no direct monetary effect.
How about QE2? FED didn't sterilize those purchases. QE2 took place while there was a run-off of loans so the increase in reserves had no effect. The reserves idly sat in member's FRBs.
That is no longer the case. For the last year C&I loans are moving up so reserve additions can lead to broad pricing power. Accordingly, FED must sterilize its ongoing Permanent purchases, or risk rational expectations for inflation.
A clear example of a liquidity crisis that is just at its outset.
Watch and see if the "crisis" in the EU doesn't subside along the lines I previously indicated. That doesn't mean it will clear up altogether. That's a workout situation that depends upon whether these societies, these socialist societies, will discipline themselves. I believe that no socialist society can ever do that because socialism breeds resentment and irresponsibility since by nature it's an elitist system.
qe3 is very much on the table.
Nope. C&I is growing and FED pumps every day, so why do they need to flood the system? Don't dare, because they're afraid to launch +rocGPL and then they'd have to raise the ff rate.
economic growth rates lowered from 3.7 to 2.5% which was the forcast in june.
Let me clue you in. FED does not act on its own forecasts much less on those of others. Instead, they react to what the economy has done. The economy is doing well currently, as well as it can without becoming unstable. US growth CAN'T exceed the growth of the world average because the US has a high tax rate and is unit labor cost inefficient.
...unemployment at a consistant lower range of 8.5 to 8.7%.....all spells RECESSION.
Hmm. The stock market underwent a two year bull run to 2000 highs with your "high unemployment" in place. Does that spell RECESSION? No. There never was a recession.
..with the backdrop of financial stresses and ineffective fiscal policy from washington.
You buy into that hype? What an amateur. There's so much data that refutes those assertions that it shows that you aren't investigating.
....you better believe the fed is willing and able to initiate qe3.
FED daily pumps $2 - $5B in Permanent. Please tell me what you are talking about if you think FED isn't engaged in QE now.
Here you are, a retail broker, making endless contradictory claims. Predictable, and useless.
Instead, you should study what i have to say.