Ft: Fed Likely To Signal Tapering Move

[thecrashingisles]

Ben Bernanke is likely to signal that the US Federal Reserve is close to tapering down its $85bn-a-month in asset purchases when he holds a press conference on Wednesday

http://www.ft.com/cms/s/0/1f6e6926-d75e-11e2-8279-00144feab7de.html

[zugzwang]

http://www.ft.com/cm...144feab7de.html

I'll believe it when I see it. Until then, it's business as usual for Benny, Abe and new boy Kid Carnage.

[easy2012]

I'll believe it when I see it. Until then, it's business as usual for Benny, Abe and new boy Kid Carnage.

Think they will pretend to taper it for a few months, then double up.

[Take Me Back To London!]

I'll believe it when I see it. Until then, it's business as usual for Benny, Abe and new boy Kid Carnage.

I agree.

We have been hearing about a QE exit strategy since 2010. It is just talk.

They mentioned a theoretical tapering of QE and the markets went into a tailspin. I doubt we will hear the word taper again from the FOMC.

[thecrashingisles]

They mentioned a theoretical tapering of QE and the markets went into a tailspin. I doubt we will hear the word taper again from the FOMC.

But since then even people like Greenspan have been saying they should taper now even if the markets tank.

[Ulfar]

When they start tapering it will be too late, if it isn't already.

[Errol]

Just talk. There is no ability to unwind. If they stop one scheme they will just start another one in secret. They are trapped - the only thing they have left now is talk.

[Take Me Back To London!]

But since then even people like Greenspan have been saying they should taper now even if the markets tank.

If the markets tanked that would make everything the Fed had done by pumping trillions of dollars into the system, since 2008, be for nothing. The Fed is not going to do that. Greenspan's comments were to rein in the over exuberance in the markets.

[interestrateripoff]

Think they will pretend to taper it for a few months, then double up.

My thoughts too. Any signal to cut back will create market turmoil as the junkies want free money.

[thecrashingisles]

My thoughts too. Any signal to cut back will create market turmoil as the junkies want free money.

Central bankers have recently given the impression that their only role is to supply the drugs but that's not always the case.

[Dorkins]

But since then even people like Greenspan have been saying they should taper now even if the markets tank.

People always say things like that when they're no longer in the hot seat being leaned on by powerful vested interests.

[thecrashingisles]

People always say things like that when they're no longer in the hot seat being leaned on by powerful vested interests.

He wasn't saying it until now.

[Dorkins]

He wasn't saying it until now.

Maybe it takes a while for their egos to rationalise the fact that they just spent their careers looking after the interests of the rich and powerful at the expense of the common man. My guess is that there's not that many true sociopaths at the top (Tony Blair and Fred Goodwin are obvious exceptions) and most of them are just intelligent and capable individuals who find themselves bending to fit the power structures that surround them.

Merv seems like a prime candidate for getting all truthy and righteous once he's out of office.

[Venger]

WASHINGTON | Fri Aug 23, 2013 6:30pm EDT

(Reuters) - What a difference a year makes.

Federal Reserve Chairman Ben Bernanke used the 2012 meeting in Jackson Hole as a platform to make his case for a third round of bond buys. This year, with the Fed chief absent, the tone was starkly different as featured research papers questioned the value and efficacy of the central bank's unconventional stimulus policies.

... Even the Fed's own research has signaled growing distaste for the policy internally. Prominently, a recent paper from San Francisco Fed President John Williams emphasized the dangers of pushing a relatively untested policy too far.Instead, policymakers appear keen to rely more heavily on "guidance" such as the Fed's current indication that, as long as inflation is in check, it will keep rates near zero until the jobless rate falls to 6.5 percent.

"The Fed has made the determination that the benefits of additional QE have gone down," Vincent Reinhart, chief U.S. economist at Morgan Stanley, said on the sidelines of the meeting. "They have a new toy, the thresholds to send signals, they never as a group particularly had much confidence in it."

Susan Collins, an economics professor at the University of Michigan, questioned markets' conventional wisdom that a September reduction in bond buys was a certainty.

"I think September is too soon. I don't think it's a done deal," she said.

http://www.reuters.c...E97M10B20130823

JACKSON HOLE, Wyoming | Fri Aug 23, 2013 3:00pm EDT

(Reuters) -

The Federal Reserve should concentrate its unconventional monetary stimulus on mortgage asset purchases, according to a new study released on Friday, ditching Treasury bond buys which the authors say have not had much of an effect.

... In particular, Fed Chairman Ben Bernanke and others have argued that asset purchases work by taking safe assets out of the market and therefore forcing cautious investors to take more risk. In official parlance, this is known as the "portfolio balance effect," affecting rates in markets well beyond those targeted by the Fed.

... Instead, mortgage-buying has been more effective because, by targeting a specific sector that was under duress, Fed officials have been able to create scarcity of supply in the mortgage market, leading prices - and therefore credit availability - to rise."We find that (mortgage purchases) are more economically beneficial than Treasury (buying)," the authors write.

Recently, Fed officials have worried excess risk-taking may have gone a step too far, potentially leading to dangerous asset bubbles - hence all the talk of a 'tapering' in quantitative easing.In response to the worst recession in generations, the Fed has left official rates effectively at zero for over four years, and is on track to buy over $3 trillion in assets in an effort to support still-weak growth.

http://www.reuters.c...E97M0WE20130823

[The Masked Tulip]

Taper does not mean to end or finish does it - it means to reduce or wind down. There is a big difference between saying they will reduce QE and saying they will end it.

Of course how the markets interpret what taper means is the question.

[Giordano Bruno]

The problem is that when QE stops then the 'recover' and 'growth' also stops and goes into reverse .... so to keep fings goin ... just another samll dwink and then i'll stoop dwinking ...

That sums up my take perfectly.

[dances with sheeple]

From the comments - " Holding Treasuries to maturity is one thing BUT Mortgages that could default is quite another…"?

[Gigantic Purple Slug]

They have to taper.

See China, Brazil. India.

[TwoWolves]

They have to taper.

See China, Brazil. India.

This is what was wrong with the strategy all along. QE is like a disease that unless its short and sharp can cause endless havoc.

Either that or bail them out too.

[dances with sheeple]

This is what was wrong with the strategy all along. QE is like a disease that unless its short and sharp can cause endless havoc.

Either that or bail them out too.

Yes it is madness, and unlike Portugal Greece etc. large scale civil disorder in China, Brazil or India is GLOBALLY destabilising?

[wonderpup]

Think they will pretend to taper it for a few months, then double up.

But at that point the trust will be broken- QE was all about confidence that uncle Ben would never let them down- once tapering starts no one will have any confidence in it even if it's restarted later- after all, they tapered once, so they could taper again.