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rantnrave

Fed Announces More Tapering

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Now down to US$65bn a month

Breaking news

http://www.bbc.co.uk...siness-25954226

The US Federal Reserve has said it will reduce its bond purchases to $65bn a month, in the second straight month of winding down stimulus efforts.

The central bank had been buying bonds in an effort to keep interest rates low and stimulate growth.

The Fed justified its pullback by saying in a statement that "growth in economic activity picked up" since it last met in December.

Although the move was expected, US shares remained depressed on the news.

Edited by rantnrave

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Does seem the case that it took a year to decide to make the step and now they'll carry on in that direction, pretty much regardless.

The fed is more democratic than the boe. The hcair is powerful but there a lot regional chairs who do not really buy into the whole QE thing.

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Does seem the case that it took a year to decide to make the step and now they'll carry on in that direction, pretty much regardless.

The fed is more democratic than the boe. The hcair is powerful but there a lot regional chairs who do not really buy into the whole QE thing.

They know it doesn't work because there's been no sustained improvement in the US economy over the last three years - unlike US stock markets which have gone parabolic. The problem they have is in unwinding the monstrosity without causing another almighty crash. Bernanke doesn't have a clue, any more than he did in 2005 when he was still talking about the Great Moderation.

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I know they said they would do it. I just didn't think they would. I will watch the stock market tomorrow.

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Ha - thought so. The more they taper, the more pressure it will put on the BoE to tighten. In the short term, it's likely to reduce prices of both shares and metals and it all leads towards a day of reckoning for the housing market in the UK. :)

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You can only rape bondholders for so long before they notice they are getting sore. They are going to remain sore long after the raping stops.

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I know they said they would do it. I just didn't think they would. I will watch the stock market tomorrow.

Can they really break this cycle? Too many people are addicted to cheap credit now, what are they going to do with all this debt around?

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Can they really break this cycle? Too many people are addicted to cheap credit now, what are they going to do with all this debt around?

More to the point....cheap to service....never to be repaid......the high life. ;)

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ZIRP AND $65 bn a month easing.

Couldn't be much more accomodative.

To lower borrowing-costs to encourage borrowing in a world of high risk and over-valued asset valuations. Accommodative, but requiring willing market participants to take the risk, and believing it's the forever new normal.

And requiring banks to back their desire for debt, which they may only do for a certain amount of time, during the taper, if it leads to market corrections. Leaving those invested/over-borrowed exposed.

Edited by Venger

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You can only rape bondholders for so long before they notice they are getting sore. They are going to remain sore long after the raping stops.

sore...they won't be able to sit down before 2020

Edited by TheCountOfNowhere

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Some investors had speculated in recent days the Fed might rethink their plan because of the emerging market problems.

"I think investors had hoped that the Fed would somehow respond to the recent turbulence and show they had their back," said Jack Ablin, chief investment officer of BMO Private Bank in Chicago.

Party went well, but is coming to an end.

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More tapering and already we are seeing "weaker" economies increasing interest rates, India, Turkey, South Africa.

Stock markets to start crashing all because some idiot pressed the print button in blind panic.

Now everyone gets to go cold turkey, it doesn't look like it's going to be pretty.

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Can they really break this cycle? Too many people are addicted to cheap credit now, what are they going to do with all this debt around?

It's already broken. All the rewards have gone to the top ten percent while millions of Americans can't find decent paying jobs, while millions more can't find any kind of job. Until they can there will be no recovery.

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To lower borrowing-costs to encourage borrowing in a world of high risk and over-valued asset valuations. Accommodative, but requiring willing market participants to take the risk, and believing it's the forever new normal.

And requiring banks to back their desire for debt, which they may only do for a certain amount of time, during the taper, if it leads to market corrections. Leaving those invested/over-borrowed exposed.

They're not lowering borrowing costs. They're continuing ZIRP and QE but at a lower rate as they said they would.

Yield curve is positive = good for banks. Why would they complain?

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