Bond Markets Have Rejected Bernanke's Put

[Realistbear]

http://uk.finance.yahoo.com/news/doubts-grow-over-wisdom-of-ben-bernanke-super-put-tele-99f2c257f496.html?x=0

Ambrose Evans-Pritchard, 20:01, Thursday 4 November 2010

The early verdict is in on the US Federal Reserve's $600bn of fresh money through quantitative easing. Yields on 30-year

Treasury bonds jumped 20 basis points to 4.07pc.

It is the clearest warning shot to date that global investors will not tolerate Ben Bernanke's openly-declared policy of generating inflation for much longer.

I can't find words to express what I think about this other than: I knew Bill Gross and his cronies would overrule the Fed on this one.

Laugh? I thought I would never stop.

[yellerkat]

Yes, but the 2 and 5 years have hit record lows.

“We have to follow the Fed and buy five- to 10-year Treasuries,” said Satoshi Okumoto, a general manager in Tokyo at Fukoku Mutual Life Insurance Co., which has the equivalent of $67.8 billion in assets. “We’re staying away from 30-year Treasuries.”

LINK

Nicked from Ticker Forums.

[Realistbear]

Yes, but the 2 and 5 years have hit record lows.

“We have to follow the Fed and buy five- to 10-year Treasuries,” said Satoshi Okumoto, a general manager in Tokyo at Fukoku Mutual Life Insurance Co., which has the equivalent of $67.8 billion in assets. “We’re staying away from 30-year Treasuries.”

LINK

Nicked from Ticker Forums.

10 years are the most common treasury that mortages are based on. 30 years used to be the big one but the US has gone much more ST in recent months.

I just love the way the market is cancelling out Bernanke's hairbrained attempt to flood the market with cheap money. Bonds are all about pricing risk and they did not like the Fed's madness and have reacted by pricing money higher. Lookng at Bill Gross' bond funds recently and it shows an inordinate amount of cash which means he has been liquidating bonds ready for the Feds action.

[scepticus]

RB, this is ********.

When the fed comes buying bonds you sell them - its a risk free trade.

So if the fed comes buying 5 years you sell your 25 years and buy the 5 years.

And if the fed comes buying 15 years you sell the 5 years and buy 15 years.

The reason they are buying the shorter end of the curve is to put TIPs further into negative territory.

[WageslaveX14]

I'm a total amateur, and everything I know about bonds is learnt from newspaper articles, but to those who genuinely know about the subject, does this look like the start of a genuine bond strike?

If so, this would be the best news I've had in a long, long time.

[Realistbear]

RB, this is ********.

When the fed comes buying bonds you sell them - its a risk free trade.

So if the fed comes buying 5 years you sell your 25 years and buy the 5 years.

And if the fed comes buying 15 years you sell the 5 years and buy 15 years.

The reason they are buying the shorter end of the curve is to put TIPs further into negative territory.

Yet the reluctance of investors to leap back into the US Treasury market as they did after QE1 is revealing. The 30-year segment of the Treasury market is too small to matter, but symbolism does matter. Vigilantes sniff stealth default. "If long bond investors continue to throw their collective toys out of the cot, it risks upending the Fed's policy," said Michael Derk from FXPro.

Mr Bernanke is targeting maturities of 5 to 10 years with purchases of Treasuries. These bonds have behaved better: 10-year yields fell 14 points on Thursday to 2.48pc. However, Mark Ostwald from Monument Securities said foreign funds may take advantage of QE2 to dump their holdings on the Fed, rotating the money emerging markets rather than US assets.

Bond funds are already restive. Pimco's Bill Gross says the great bull market in bonds is over, denigrating Fed policy as the greatest "ponzi scheme" in history. Warren Buffett has chimed in too, warning that anybody buying bonds at this stage is "making a big mistake",

http://www.telegraph.co.uk/finance/economics/8111153/Doubts-grow-over-wisdom-of-Ben-Bernanke-super-put.html

Bottom line: Risk = much higher IR

The bond market is rejecting Bernake's cheap money policy--he tried to beat the market and has failed. The bubbles must continue to deflate--TIPS will just have to go into negative territory as there is nothing the Fed can do to stop it. Al Greenspan was in the same boat--position reversed--in the last decade with his super low IR policy which led to the housing bubble. He was powerless to reign the market in because the market was feeding off cheap and easy credit--no matter what the Fed did which included higher IR against a market moving in the opposite direction. . The reverse is now coming true as the cycle contnues to move and the bubble will have to burst. Bernake should have seen this like most of us on here did.

Try to beat the market and you will fail.

Edited November 4, 2010 by Realistbear

[interestrateripoff]

America's Alarm Clock Has Rung: Time's Up

Here's the deal folks.

The banksters asset-stripped the public. Twice. The first time in the 1990s with the Internet bubble, the second time in houses. If you bought a home from 2003 onward you got screwed. It doesn't matter if you were a good borrower or not - you overpaid. American business was also asset-stripped. We covered this by shipping our labor off to China, India and Vietnam.

During the last part of the 2000 decade, the Federal Reserve, Bank Regulators, Government and the Banks themselves were all in on it. We know this. We know it because Citibank's former Chief Underwriter has testified to it under oath. It is not speculation or mathematics, it is admitted fact.This was an intentional, malicious act that involved government and finance. Your "representatives" didn't represent you, they represented the banks. They acted as guards not of your wealth, but instead they held you at gunpoint while the bank robbed you. This is the proximate cause of the market and economic collapse - your productive wealth was literally stolen through these frauds.

Now they're at it again. First, Ben Bernanke imposed, without a vote, a tax on the American People of over $1 trillion through his original "QE " game. This went immediately into commodity and stock prices worldwide but was in fact a tax on you, and on every productive business. This is the reason that unemployment remains at close to 10%. By now we should be well on our way to recovery. The government blew $600 billion on stimulus programs. They got nothing for it because of QE, which took it all back out, plus more through the tax - a tax that went directly into the bankers pockets. This unlawfully-imposed tax was used to cover the banks' insolvencies, along with the blatant extortion practiced by Rep. Kanjorski on FASB (who, incidentally, lost his seat Tuesday.) But the banks did not clear their balance sheets - they are, in fact, still insolvent. Instead, they literally took the money and paid it in bonuses.

Now that the banks are once again running out of money Ben Bernanke is at it again. He has announced another $600 billion in illegal taxation on America, and intends to give it again to the bankers. A good part of it already showed up in oil and other commodities. The rest of it will. It is guaranteed. The "benefit" will go overseas. The tax will fall on you.

THIS IS THE LARGEST TAX EVER IMPOSED ON THE AMERICAN PEOPLE IN THE HISTORY OF THE NATION. IT IS MORE THAN FOURTEEN TIMES THE BUSH TAX CUTS "ON THE RICH" THAT EVERYONE IS DEBATING. GOLDMAN SACHS BELIEVES THAT BERNANKE WILL IMPOSE A TOTAL TAX THROUGH QUANTITATIVE EASING OF MORE THAN FOUR TRILLION DOLLARS OVER THE NEXT TWO YEARS, OR MORE THAN FIFTY SEVEN TIMES THE BUSH TAX CUTS.

If you, America, do not rise and stop this NOW you're all going to be effectively dead economically.

Your assets will be stripped.

All of them.

Your homes.

Your businesses.

Your savings - as if having the earnings you can receive on a safe CD cut from 5% to 0.5% isn't bad enough.

And, when the inevitable margin collapse comes in the corporate sector, your stock portfolio will detonate again and your pension funds, Medicare, Medicaid and Social Security will be gone.

Either you rise and stop Bernanke and The Fed, or he - and they - win - and we all lose.

There is no "individual path" that will keep your assets safe from this. There is no means to hide, so long as you're an American citizen and live in this nation.

We have two choices: we collectively stop this madness or we all get destroyed.

Those are the only choices.

For three years and change I have warned of this outcome. I have pointed out that there is three trillion dollars or more of losses that have to be taken in the economy.

Those losses should fall on the banksters who committed these acts. Doing so will cause these banks to be taken into receivership. They will have to be resolved.

Virtually none of those losses attributed to them have been taken by these institutions.

These losses have all fallen on you, through unemployment, through higher energy prices and higher prices at the grocery store. All of these are taxes that are being illegally imposed on you by a Central Banker who lacks the legal authority to impose a tax.

Yet he's doing it, and you're being told to cheer because the DOW is up 200 points.

I want to note that in 2007 I wrote a similar Ticker urging people to stop this ******* when he started interfering like this. You did nothing, because the S&P was headed to 1576 and the DOW over 14,000 on the back of his original "rate cuts" and other machinations. I was called all sorts of names, the kindest of which were "kook." You sat on your hands instead of rising to stop this crap and were repaid by watching your portfolio get cut by 60% in the next two years, two major banks blowing up in an uncontrolled fashion, and threats of tanks in the streets.

If you do not stop him - remove him from office - NOW - you will be destroyed.

That is a certainty.

We no longer have the "margin" to absorb another mistake like the last one. And this crap that is pulling now is the mother and father of all mistakes.

It's your choice America - but where this road leads is not open to debate. These institutions that robbed you can only survive the consequences of their acts by destroying you, and they are hellbent and determined to do exactly that, with Ben Bernanke as the man who is literally destroying not only your economic present, but that if the future as well for yourself and your children.

You no longer have the luxury of time.

Still the people have the recovery....

Denniger still on the brink of exploding as he types.

Edited November 4, 2010 by interestrateripoff

[Errol]

Other things are soaring as well ....

[interestrateripoff]

It would appear RB beat me to this by a few minutes.

http://www.telegraph.co.uk/finance/economics/8111153/Doubts-grow-over-wisdom-of-Ben-Bernanke-super-put.html

The early verdict is in on the US Federal Reserve's $600bn of fresh money through quantitative easing. Yields on 30-year Treasury bonds jumped 20 basis points to 4.07pc.

It is the clearest warning shot to date that global investors will not tolerate Ben Bernanke's openly-declared policy of generating inflation for much longer.

Soaring bourses may have stolen the headlines, but equities are rising for an unhealthy reason: because they are a safer asset class than bonds at the start of an inflationary credit cycle.

Meanwhile, the price of US crude oil jumped $2.5 a barrel to $87. It is up 20pc since markets first concluded in early September that 'QE2' was a done deal.

This amounts to a tax on US consumers, transferring US income to Mid-East petro-powers. Copper has behaved in much the same way. So have sugar, soya, and cotton.

The dollar plunged yet again. That may have been the Fed's the unstated purpose. If so, Washington has angered the world's rising powers and prompted a reaction with far-reaching strategic consequences.

Li Deshui from Beijing's Economic Commission said a string of Asian states share China's "deep bitterness" over dollar debasement, and are examining ways of teaming up to insulate themselves from the tsunami of US liquidity. Thailand said its central bank is already in talks with neighbours to devise a joint protection policy.

Brazil's central bank chief Henrique Mereilles said the US move had created "excessive dollar liquidity which we are absorbing," forcing his country to restrict inflows. Mexico's finance minister warned of "more bubbles."

These countries cannot easily shield themselves from the inflationary effect of QE2 by raising interest rates since this leads to further "carry trade" inflows in search of yield. They are being forced to eye capital controls, with ominous implications for the interwoven global system.

In London and Frankfurt the verdict was just as harsh. "In our view, this is one of the greatest policy mistakes in the Fed's history," said Toby Nangle from Baring Asset Management.

"The Fed is gambling that the so-called 'portfolio balance channel effect' – pushing money out of government bonds and into other assets – will lift risk asset prices. The gamble is that this boosts profits and wages, rather than simply prices. We remain unconvinced. How will a liquidity solution correct a solvency problem?" he said.

"A policy error," said Ulrich Leuchtmann from Commerzbank. The wording of the Fed statement is "potentially dangerous" because it leaves the door open to a further flood of Treasury purchases if unemployment stays high. "It is a bottomless pit," he said.

Is the final end game looming?

China and America seem logged in a struggle to keep each others currencies as low as possible, smoke and mirrors everywhere this is a trade war and ultimately it will be the people that suffer.

The longer the necessary purge is put off the greater the damage will be inflicted once this lunacy is finally ended.

Still I'm sure it's all contained.

[Number79]

RB, this is ********.

When the fed comes buying bonds you sell them - its a risk free trade.

So if the fed comes buying 5 years you sell your 25 years and buy the 5 years.

And if the fed comes buying 15 years you sell the 5 years and buy 15 years.

The reason they are buying the shorter end of the curve is to put TIPs further into negative territory.

Short, sweet and sensible. Thanks for that.

[Realistbear]

I'm a total amateur, and everything I know about bonds is learnt from newspaper articles, but to those who genuinely know about the subject, does this look like the start of a genuine bond strike?

If so, this would be the best news I've had in a long, long time.

I unloaded nearly all my bond positions last week and transferred some into ST funds (Weitz short term bond fund).

I think Buffett and Gross call on this is correct. Higher IR will follow because risk is rising--despite the Feds move to keep IR low to stimulate the eocnomy.

Bottom line: the Western economies are like a dead bull--its been running too long and its bloated and unable to carry on. It must deflate to rid its gut of the bubbles and imbalances. It needs to essentially take a massive shit to clear out the toxins before starting again. Too much overcapicity, too much debt, too little demand---Japan.

[Number79]

Other things are soaring as well ....

we don't get comments from RB on up days, he isn't paid to do that

[Realistbear]

It would appear RB beat me to this by a few minutes.

http://www.telegraph.co.uk/finance/economics/8111153/Doubts-grow-over-wisdom-of-Ben-Bernanke-super-put.html

Is the final end game looming?

China and America seem logged in a struggle to keep each others currencies as low as possible, smoke and mirrors everywhere this is a trade war and ultimately it will be the people that suffer.

The longer the necessary purge is put off the greater the damage will be inflicted once this lunacy is finally ended.

Still I'm sure it's all contained.

Nailed it.

+1.75, even 2

[Realistbear]

I suspect the SM euphora could turn into a route after they digest the toxicity of the Fed move. When they realise that IR are being triggered higher we might even see some black days ahead.

Bernanke shoud have expected the unexpected.

[The Masked Tulip]

Can someone explain to me in numpty terms:

1. Is the 600 billion QE2 welcomed by most or do most think it is madness? I don't mean us on HPC but the fund managers, economists, etc.

2. I see the DOW, FTSE have shot up - I assume the brokers, the fund managers think QE2 in the US is good, or they fear inflation eroding their cash (as I do), but aren't the boys who buy stocks also the same people who buy bonds?

3. What is happening with the bonds? Are the the buyers of bonds happy with QE2 or are they about to dump and run?

In other words, 24 hours after QE2 was announced where are we? Are people rejoicing at the brilliance of Bernanke or are they about to go into melt-down? Is there a consensus yet?

[interestrateripoff]

Bernanke's Folly: The End Game

Consider the following number:

9,069,879,047,803.52

That's the "marketable" debt - $9 trillion.

Here's The Fed's numbers in debt held, as of now, in billions:

834 - Treasuries

1,059 - Mortgages (at what embedded loss?)

150 - Agency (Fannie and Freddie) debt

There are some other things in here too, but that's the basics as of October 27th.

The Fed proposes to buy $600 billion of additional Treasuries, and at the same time roll off agency debt and mortgages, rolling that into Treasuries. Call the entire thing $800 billion.

So their balance sheet will look like this:

1,600 - Treasuries

959 - Mortgages

50 - Agency debt

Over time they expect the balance sheet to shift, so that the Treasuries are all that's there. This means they want it to look like:

2,700 - Treasuries

Yeah.

Now remember, as of right now, China holds $860 billion of Treasuries and Japan holds $836 billion. The UK is down at $400 billion and then Oil Exporters, at $226.

So once QE is done The Fed will own more than China and Japan combined, about 18% of the total.

Why is this a problem?

Simple: The purpose of issuing bonds into the market is to provide a putative check and balance on Treasury overspending. That is, at some point the continued issuance causes the bond market to revolt and refuse to buy, driving rates much higher. That in turn causes the interest expense to go to the moon.

This threat is the primary check and balance on an out-of-control Federal Government.

The "Chartalists" (and their useful idiots everywhere) claim that the Federal Government simply spends money into existence, and thus they can do this all they want. Well, technically true - you can print all the money you want. However, you cannot control it's value except through relative scarcity!

The Bond Market, rather than being a monetary tool as these people claim, is in fact a fiscal discipline enforcement device.

This is what The Fed with its QE and now QE2 has destroyed.

When Ben Bernanke said "we will not monetize the debt" what he was saying is that he would not permit that fiscal discipline device to be removed from the scales of financial balance. He lied - he not only removed it with QE1, he has now ratified that this discipline function will remain removed via QE2.

The problem with removal of this device of restraint is that fiscal discipline is in fact the only way one avoids imposing taxes on the public. Taxes come either in the form of a literal tax that must be paid or they are financed by causing an increase in the price of things denominated in a currency as a result of debasement.

Taxes inhibit business profits by diverting income from the business and to government. Therefore, in the general sense, the lower the tax rate the more business prospers. Of course taxes cannot be zero, because the government must have funding to perform its essential functions - we merely argue over what those essential functions are and how to pay for them.

QE is effectively naked emission of currency into the economy by government spending. It thus always results in shifting the price equilibrium on commodities in that currency to the right - that is, higher. At the same time since input costs are effectively a tax on production pressure downward is increased on wages. This in turn means that while cost pressures go upward, wages go downward.

Thus QE cannot spur employment. It in fact does the opposite by imposing an effective tax on business operations and consumers, which tends to drive down after-tax compensation of employees.

Ben Bernanke claims that QE is intended to "spur investment" by increasing the "wealth effect." But any such effect is in fact transitory, as one cannot support higher stock valuations while margins are being pressured. You need margin expansion to be able to support higher valuations over time, and that means you need either lower input costs, higher employee after-tax earnings or both.

Bernanke's policies are in fact pushing both of these factors the wrong direction.

But worse, consider the certain "death spiral" scenario on the path we are now traveling:

1. QE is an implicit tax on the population. Input costs go up. This is an effective tax increase on everyone in the country. A dollar increase in the price of gasoline is an effective $140 billion dollars a year in additional tax, as just part of the impact. Basic staples are already up about 10% annualized, despite Bernanke's claim of "no inflation." Note that the "tax on the rich" everyone is talking about is a mere $70 billion a year by comparison.

2. This in turn means lower disposable income for consumers. That in turn hits discretionary spending. And that, in turn, means companies don't need to hire people to provide discretionary goods and services. This is what Bernanke did with QE1. He in fact destroyed job creation, which is a big part of why we still have 10% unemployment! Bernanke CAUSED that unemployment by creating a price ramp in the commodity space!

3. This, in turn, means more demand for social programs. More unemployment. More Medicaid. More food stamps. More government spending of all sorts. But there is no tax revenue increase coming in to pay for these increased demands (it's all going to the commodity producers) so the government once again turns to the bond market and issues debt to fund this increased spending demand.

4. Left alone, the bond market will react to this "never-ending" deficit spending cycle by increasing rates in an attempt to cut it off. This in turn provokes The Fed into even more QE to "spur employment and increase asset prices."

See the problem? The more QE you do, the more jobs you destroy because you continue to trash margins through the imposition of an effective tax on the entire economic system.

Eventually The Fed ends up being, for all intents and purposes, the entire government bond market.

At that point the issuance of credit money is no longer backed by anything at all - it is simply emitted raw, and for every dollar emitted in this fashion you have both a 100% transmission into prices and a premium applied on your threat to do more of it.

That's Weimar Germany folks - it is exactly what happened there, and exactly what will happen here unless Bernanke stops this crap. Since he won't stop on his own volition it is up to Congress and the people to stop him.

Metals will not save you if this spiral occurs. Nothing will save you, other than not being in the nation that this happens to. Government will, in its last gasps of trying to prevent itself from being unable to pay the military, Congress, and of course Ben, find ways to literally confiscate everything in a futile attempt to increase the asset base upon which it issues its increasingly-worthless currency.

There is no exit that can come from a "growing" economy when you are continually increasing the implicit tax rates in the general economic system as your response to each previous tax increase. That is, when your tax increase results in more unemployment and you respond by further increasing taxes, you are simply tightening the noose around your own neck.

The implied tax that has been imposed on the economy thus far since QE1 was put in place is a stunning $250 billion annually due to oil's price increase alone, or nearly four times the so-called "Bush Tax Cuts" for the rich. QE2 will add another $1/gallon (roughly) to gasoline which is another $140 billion, for a total of almost $400 billion each and every year.

And that's just in oil prices - then you have to add in all the other input cost-push problems, from corn to wheat to oats to cotton to wood pulp. The total effective tax increase from QE2 is in fact the entire $600 billion QE package, plus whatever the market anticipates Ben will do as a follow-on!

What is being done here, if it is not stopped by Congress and/or the people, will destroy the economy. There is no ability to withdraw the QE-anything without causing all of the previously-hidden costs to immediately assert themselves in the economy. This is not speculative - it is factual. We cannot get wage inflation due to the lack of pricing power by labor in a market with 17% of the people either out of work or underemployed and another 7 million who are not counted as they are not part of the labor participation rate, which has declined by 5% in the last two years. The true unemployment rate is thus closer to 25%.

Without the ability to pressure wages higher there is no means available to set in motion Bernanke's "virtuous cycle" he is looking for as there is no pricing power for labor today.

We won't get a "high inflation" spiral. We will instead get a downward-spiraling economic disaster where employment and productive investment is successively destroyed by these artificially-imposed tax increases that amount to hundreds of billions of dollars over the next six months - north of a trillion in just one year, or some seventeen times the amount Congress is "debating" with the "tax cuts for the rich."

This is the true tax issue that will destroy our economic future - and nobody's talking about it.

Denniger doesn't like this recovery does he.

[libspero]

we don't get comments from RB on up days, he isn't paid to do that

It is RB's thread about bonds.. an occasional dig in the ribs on gold, fair enough, but don't you think it gets a bit boring when every thread he posts they have to bring it up?

If I was him I'd ignore it too.

[scepticus]

By reducing near term rates and rising long term rates, the profitability of banks just got a whole lot better.

before long, as this program comes to an end or speculators smell further trouble in the US housing market, they'll start buying the long end (which just got cheaper thanks to the fed), just before the fed comes buying the long end.

"You are now perhaps thinking that I am full of shit, because clearly bond vigliantes bid up interest rates and bond prices down, when governments behave badly, or the government finances start looking iffy. What you are doing here though (apologies if you were not thinking that), is only looking at one side of the trade. When bond vigs sell off UK gilts for example, the same money gets parked in some other government debt instrument sponsored risk free speculation opportunity, and rates get bidded down there instead. Out of such nonsenses of herd behaviour are borne the international capital flows of hot money, baby! By deliberately ignoring, Lord Nelson stylee (putting his telescope to his blind eye at the Battle of Copenhagen), the effects on the global economy (which is closed) and focussing on the specific situation of one or other open national economy the narrative of bond vigilantes bidding up rates is sustained in our collective imagination despite 30 plus years of falling interest rates."

[R K]

30 yr yields have risen 'cause he's said he's pumping all the money into the 5-7yrs on average wrong footing those traders front running him with long bond purchases.

http://ftalphaville....eepening-curve/

http://ftalphaville....-us-treasuries/

Edit: Denninger appears to be saying he's rather be at the mercy of Chinese mercantilism and their dollar peg policy. It's nutjob ;free market' Republicans got us into this fekking mess in the first place.

Edited November 4, 2010 by Red Karma

[Realistbear]

It is RB's thread about bonds.. an occasional dig in the ribs on gold, fair enough, but don't you think it gets a bit boring when every thread he posts they have to bring it up?

If I was him I'd ignore it too.

The Gold bugs are jumping in without realising what damage the bond markets can do to Bernake's attempt to inflate away debt. All he has done is invite a vicious backlash that will force IR higher.

Anyone on here actualy buying gold at these prices?

Bonds are more interesting because they actually move everything else. FOREX moves on bond prices and FOREX is a very big mover.

[The Masked Tulip]

30 yr yields have risen 'cause he's said he's pumping all the money into the 5-7yrs on average wrong footing those traders front running him with long bond purchases.

http://ftalphaville.ft.com/blog/2010/11/04/394586/the-lonely-long-bond-the-steepening-curve/

http://ftalphaville.ft.com/blog/2010/11/04/394281/soma-confusion-in-us-treasuries/

That sounds incredible. I really wish I understood what it meant.

[Realistbear]

30 yr yields have risen 'cause he's said he's pumping all the money into the 5-7yrs on average wrong footing those traders front running him with long bond purchases.

http://ftalphaville.ft.com/blog/2010/11/04/394586/the-lonely-long-bond-the-steepening-curve/

http://ftalphaville.ft.com/blog/2010/11/04/394281/soma-confusion-in-us-treasuries/

30 years are too small to have much influence. The action is on the 10 year. The ripple effect radiates up and down the bond ladders. If Bernanke was tryng to force IR down on medium term bonds his failure has occured faster than anyone might have been ableto anticipate. That said--Gross' bnd funds have been liquidating for cash ovder the last sveral months. The big one--PIMCO Total bond fund was holding 43% cash and very short term last time I looked--very unusual for a bond fund not anticpating some huge IR hikes.

Edited November 4, 2010 by Realistbear

[Realistbear]

Can anyone post FT farticles?

Headines from FT:

From GLOBAL ECONOMY 6:43pm

Backlash against Fed’s $600bn easing

Reuters Emerging markets eye defensive measures

Editorial Comment Bernanke pushes on very long string

Doubts remain over economic growth Brazil ready to retaliate against Fed move Interactive Quantitative easing explained Trichet avoids transatlantic dispute

Ten-year yields will measure QE2 success

Brasil is gearing up for a counterstrike vs. the Fed---what are they planning --a $ absorption play?

Edited November 4, 2010 by Realistbear

[The Masked Tulip]

Can anyone post FT farticles?

Headines from FT:

From GLOBAL ECONOMY 6:43pm

Backlash against Fed’s $600bn easing

Reuters Emerging markets eye defensive measures

Editorial Comment Bernanke pushes on very long string

Doubts remain over economic growth Brazil ready to retaliate against Fed move Interactive Quantitative easing explained Trichet avoids transatlantic dispute

Ten-year yields will measure QE2 success

Brasil is gearing up for a counterstrike vs. the Fed---what are they planning --a $ absorption play?

I hope their retaliation will involve sending in waves of female Rio Carnival dancers. If they invaded here I would promptly surrender and offer to tell them anything they wished to know.

So... has QE2 saved the planet or will the World stop spinning soon?

[mdman]

Gross and el Erian of PIMCO have also described this as a ponzi scheme so immense they should stop using the word 'ponzi' from now on and use the word 'sammy' after uncle Sam - a Sammy scheme.

The criticism is snowballing. It is not confined to blogs. I think the end of bernanke's reign is not too far away.