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Bernanke Signals No New Round Of Easing

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Ben Bernanke sent a strong signal that the US Federal Reserve is not planning to loosen monetary policy despite weaker economic data, saying that the recovery “appears to be proceeding at a moderate pace”.

“The US economy is recovering from both the worst financial crisis and the most severe housing bust since the Great Depression, and it faces additional headwinds ranging from the effects of the Japanese disaster to global pressures in commodity markets,” the Fed chairman said in a speech in Atlanta on Tuesday. “In this context, monetary policy cannot be a panacea.”

Mr Bernanke’s comments will dash market hopes that the Fed might launch a third round of quantitative easing – nicknamed QE3 – in response to weak numbers on growth and the labour market recently.

http://www.ft.com/cms/s/0/2b82bade-912c-11e0-9668-00144feab49a.html#axzz1OXTPSXTS

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They all should read our HPC forum and learn about what's really happening ...

Sadly, they all live in a different world and only care about their masters (bankers)...

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Contrarian indicator, i.e. he means the opposite of what he actually says.

I see no inflation = Uber inflation on the way.

Deflation is the enemy = inflation is the enemy..

c'mon you're HPCers not BBC drones

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Too early. Politically he'll have to wait for a clamour from all and sundry.

Nah the scare stories are already starting to come out to make people beg for it. Thus forcing a bit of stockholm syndrome whereby the victims are greatful to their muggers.

We'll be discussing this for QE4 5 and 6. At QE10 RB might stop banging on about deflation. At that point we'll all be quintillionares. But bread can only be bought with sovs.

Edited by ken_ichikawa

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Hmmm. Do I believe him and short the market? Or think he is lying and leverage up for the upside explosion when QE3 comes?

F it..... I'll just stay in gold.

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Wow, Richard Koo UNLOADS On Paul Krugman: He Got It Wrong On QE2, And Now Obama Has An Awful Situation

Read more: http://www.businessinsider.com/richard-koo-paul-krugman-qe2-2011-6#ixzz1Odfuuczv

The result of QE2 has not lived up to administration, or Krugman's expectations, according to Koo. Instead, we're left with only two policy choices: protectionism and dollar devaluation, or more fiscal stimulus.

It's important here, to note, WHY QE2 doesn't work, according to Koo... essentially all that happened is that by buying up Treasuries, investors were forced to look for returns elsewhere, in places like stocks and commodities. The latter, the commodity gains, ended up slowing down the economy. What's more, QE2 has had no positive impact on bank lending whatsoever.

Koo notes that, because of the current political situation, fiscal stimulus now seems unlikely. Consensus has formed around austerity, and that would need to change for more government spending to be put in place. Standing in the way is Republican opinion, Democrat acquiescence, and ratings agencies who seem prepared to downgrade the U.S.

The alternative, protectionism and dollar devaluation, could be disastrous if history is any example, according to Koo.

The dollar’s plunge began on 25 March, and the US currency dropped ¥15 in six weeks. Japanese investors who had long been buyers of dollar bonds rushed to sell, driving up the yield on the 30-year Treasury bond by 150bp, from 7.5% to 9%. The yields on Japanese government debt simultaneously plunged as Japanese investors repatriated yen and parked the money in the JGB market. As a result, US and Japanese long-term interest rates moved inversely to each other during this period (Figure 1).

This episode, which began late in March 1987, eventually led to the Black Monday stock market crash in October that year. A similar series of events today could have a devastating impact on the US economy—a sharp rise in long-term interest rates at a time when the housing market is already in its worst shape since the Great Depression would have traumatic implications.

Read more: http://www.businessinsider.com/richard-koo-paul-krugman-qe2-2011-6#ixzz1OdfiLEt3

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Wow, Richard Koo UNLOADS On Paul Krugman: He Got It Wrong On QE2, And Now Obama Has An Awful Situation

Read more: http://www.businessinsider.com/richard-koo-paul-krugman-qe2-2011-6#ixzz1Odfuuczv

Read more: http://www.businessinsider.com/richard-koo-paul-krugman-qe2-2011-6#ixzz1OdfiLEt3

Bling has had it's day, if this is true, its a sell moment..........................No QE3, ..it's the end of the world as we know it...........................

Edited by Panda

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QE2 will not be expanding, but it will still be in operation, even after June, as it rolls over maturing treasury bonds.

When the stockmarkets plunge, the Fed will be in there with QE3, QE4, QE5.

news-graphics-2008-_656889a.jpg

Good game, good game...

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Thanks for that tmt.

It was also noted elsewhere that qe by causing inflation in emerging markets has caused them to tighten their monetary policies which has also served to dampen demand in addition to the commodity price rises.

I think they have stuffed Obama good and proper - and the rest of us of course.

The US election run has now begun and Obama is going to have no choice other than condone QE3 printy printy. Any austerity measures now will result in even more US job losses, houses being lots, etc. That means more lost votes for Obama in a country where millions of people who voted for his 'Hope' are now without work.

He never addressed the problem when he got elected. I think the result now is that he will agree to loadings of QE to try and get re-elected. It is just a question of the markets crashing first so he can be seen as rescuing Wall Street to safeguard Main Street. Spin, spin, spin.

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The Man Who Wrote The Book On This Economy Demolishes Bernanke's QE2 "Gamble"

There's probably no better person to assess the state of this economy than Richard Koo, the Nomura economist whose book The Holy Grail Of Macroeconomics is all about the unique nature of a post-crisis, deleveraging, balance sheet recession.

So when he speaks out on QE2, it's a must read.

The first key points from his new report are encapsulated in this chart, which confirms that QE2 has had no positive impact on the money supply. There's simply no connection. The world is NOT awash in cash.

QE2 money supply koo

So in light of that, what has QE2 done?

When the Fed buys a specific asset (in this case, longer-term Treasury securities), the price of that asset rises. That prompts private investors to re-direct their funds to other assets, which leads to a corresponding increase in the price of those assets.

And thus the impact on other markets:

The only remaining destinations for these funds were equities, commodities, and real estate. Real estate had just been through a bubble and remained characterized by heavy uncertainty. In commercial real estate, for example, banks—at the request of US authorities—are engaging in a policy of “pretend and extend” and offering loans to borrowers whose debt they would never roll over under ordinary circumstances. That means that current prices do not accurately reflect true market prices. Housing prices, meanwhile, resumed falling late in 2010.

UK house prices have been falling since mid-2010, and the Halifax House Price Index dropped 1.4% in April 2011 alone (the decline was 3.7% on a y-y basis).

The only remaining options for private-sector investors have been stocks and commodities. That, in my opinion, is why both markets have surged since the announcement of QE2.

His conclusion: QE2 was a huge gamble, and the end of these bubbles could exacerbate the great recession.

Read more: http://www.businessinsider.com/richard-koo-on-qe2-2011-5#ixzz1OfbNHE7q

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I think they have stuffed Obama good and proper - and the rest of us of course.

The US election run has now begun and Obama is going to have no choice other than condone QE3 printy printy. Any austerity measures now will result in even more US job losses, houses being lots, etc. That means more lost votes for Obama in a country where millions of people who voted for his 'Hope' are now without work.

He never addressed the problem when he got elected. I think the result now is that he will agree to loadings of QE to try and get re-elected. It is just a question of the markets crashing first so he can be seen as rescuing Wall Street to safeguard Main Street. Spin, spin, spin.

To be fair to Obama he's part of a dysfunctional political system which seems totally incapable of coming to grips with the problems. The Democrats won't hear of entitlements being touched and the Republicans are always calling for tax cuts which, in the past, have only resulted in more inequality and, arguably, exacerbated the problems faced by the US. Personally I don't have all that much time for Obama but the system is at fault and not just him. It's all most unfortunate.

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According to Richard Fischer of the Dallas Fed, the net effect of QE2 was equivalent to a tightening of monetary conditions for households :

My linkhttp://www.housepricecrash.co.uk/forum/index.php?showtopic=164766

Perhaps they are slowly waking up to the fact that they cannot solve the problems painlessly and that the Austrians were right.

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Perhaps they are slowly waking up to the fact that they cannot solve the problems painlessly and that the Austrians were right.

What? Dressing up in leather shorts and spanking each other's bottoms? :blink:

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which confirms that QE2 has had no positive impact on the money supply. There's simply no connection. The world is NOT awash in cash.

ooooooooooooooooooooooohhhh really.....................................ahhhhhhhhhhhhhhhhhhhhhhhhhh right.

Anyone really think its the end of QE to oblivion? I don't buy it meselk like chuck!

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He never addressed the problem when he got elected. I think the result now is that he will agree to loadings of QE to try and get re-elected. It is just a question of the markets crashing first so he can be seen as rescuing Wall Street to safeguard Main Street. Spin, spin, spin.

Indeed - no more QE until the markets crash again and the usual media pundits are practically begging for it. Meanwhile, a fantastic buying opportunity for those in the know to offload the freshly printed cash that was handed to them.

Money printing has been the response since day one. It has been extremely successful in that it has allowed the banksters to escape the consequences of their debts by making everyone else pay for them and it will continue to be used until the whole financial system hits an all out hyperinflationary bust.

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If it's a hyperinflationary bust they want (politicians), do they also want to be hung from tall trees when the people riot. Or do they not think that far ahead. :unsure:

They think they can print as much as they like as long as people don't expect inflation and that their "expectations" are "anchored."

i.e. they want to fill the room with poison gas but as long as you aren't told all will be well so breathe deep.

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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