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Posted: 9/20/2011 7:43:40 AM EDT
[#1]
Does Mr. Market know something everyone else doesn't about the FOMC meeting today and tomorrow?
I'm betting on a QE3 announcement (figuratively). Not like Bernanke has any other irrational choice. |
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Posted: 9/20/2011 8:42:22 AM EDT
[#2]
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Does Mr. Market know something everyone else doesn't about the FOMC meeting today and tomorrow? I'm betting on a QE3 announcement (figuratively). Not like Bernanke has any other irrational choice. I am confident that not only do select people/groups get the news "early" but some of them actually have a hand in shaping the news. |
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Posted: 9/20/2011 8:48:42 AM EDT
[#3]
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Does Mr. Market know something everyone else doesn't about the FOMC meeting today and tomorrow? I'm betting on a QE3 announcement (figuratively). Not like Bernanke has any other irrational choice. I am confident that not only do select people/groups get the news "early" but some of them actually have a hand in shaping the news. Based on everything is up from stocks to commodities, the insiders already know that the fed will announce QE3 . This country is so fucking corrupt it is unbelievable. Fuck all of them. |
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Posted: 9/20/2011 9:39:32 AM EDT
[#4]
More of the same. As long as there is "hope" that the FED will promise to print their way out of any mess that comes their way, the status quo will hold up until it can't anymore. The system is surviving SOLELY AND EXCLUSIVELY on the fact that the players think the FED can create money out of thin air as needed to fill holes with little to no negative impact. Does that sound reasonable? Is there a point where the FED can no longer be effective? Nobody knows as, each and every day, we go farther into uncharted territory. What happens if the FED reaches that point and all "hope" is lost? Nobody wants to think about that. Some "experts" are predicting that the FED may start buying EU sovereign debt to stem the crisis over there. Either S&P is batshit crazy for all the soverign downgrades or they are the only one with balls enough to call a spade a spade. Meaning that if S&P is right and is counting the dominos as they fall, there may be a point where dominos can't be added as fast as they are falling. |
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Posted: 9/20/2011 10:04:05 AM EDT
[#5]
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Shhh, he's fragile, and still likely has access to this thread.  Sherrick got back bone and he'll not back down when he thinks he's right. 
I admire that in him! He's probably not paying to much attention to this stuff anymore. He has a far greater blessing to spend his time on now. 
I know he had an addition to his family. Did he get the Ban Hammer? I think it would be preferred that he left of his own Geneva Accord.  It appears that he did, since just yesterday he started a thread in GD about how his newborn wasn't tactical enough.
I'm glad he didn't get locked out of the discussion. He may be an arrogant sonofabitch, but he's OUR arrogant sonofabitch.
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Posted: 9/20/2011 10:45:29 AM EDT
[#6]
As The Shadow Banking System Imploded In Q2, Bernanke's Choice Has Been Made For HimWith the FOMC meeting currently in full swing, speculation is rampant what will be announced tomorrow at 2:15 pm, with the market exhibiting its now traditional schizophrenic mood swings of either pricing in QE 6.66, or, alternatively, the apocalypse, with furious speed. And while many are convinced that at least the "Twist" is already guaranteed, as is an IOER cut, per Goldman's "predictions" and possibly something bigger, as per David Rosenberg who thinks that an effective announcement would have to truly shock the market to the upside, the truth is that the Chairman's hands are very much tied. Because, all rhetoric and political posturing aside, at the very bottom it is and has always been a money problem. Specifically, one of "credit money." Which brings us to the topic of this post. When the Fed released its quarterly Z.1 statement last week, the headlines predictably, as they always do, focused primarily on the fluctuations in household net worth (which is nothing but a proxy for the stock market now that housing is a constant drag to net worth) and to a lesser extent, household credit. Yet the one item that is always ignored, is what is by and far the most important data in the Z.1, and what the Fed apparatchiks spend days poring over, namely the update on the liabilities held in the all important shadow banking system. And with the data confirming that the shadow banking system declined by $278 billion in Q2, the most since Q2 2010, it is pretty clear that Bernanke's choice has already been made for him. Because with D.C. in total fiscal stimulus hiatus, in order to offset the continuing collapse in credit at the financial level, the Fed will have no choice but to proceed with not only curve flattening (to the detriment of America's TBTF banks whose stock prices certainly reflect what a complete Twist-induced flattening of the 2s10s implies) but offsetting the ongoing implosion in the all too critical, yet increasingly smaller, shadow banking system. And without credit growth, at either the commercial bank, the shadow bank or the sovereign level, one can kiss GDP growth, and hence employment, and Obama's second term goodbye. As the two charts below demonstrate, the economy's ongoing inability to create any growth in the shadow banking system, primarily as a result of the complete shut down of the securitization machine, has been and continues to be, the biggest threat to the Fed. Specifically, after hitting an all time high of $20.9 trillion in March of 2008, this all too critical source of "credit money" has collapsed by a whopping 25%: since the peak $5.5 trillion of credit, and not just any credit, but shadow, and thus non-regulated credit, has evaporated! And as Q2 demonstrated, after almost bottoming in Q1 following a decline of just $57 billion, or the smallest Q/Q decline since Q2 2008, the drop has picked up again, with a one year high $278 billion plunge in Q2. Among the liability components of the Shadow Banking system's credit money abstractions, we look at:
Altogether, added across this amounts to a massive $278 billion in the second quarter, and explains why GDP, when the manipulation from the Census Bureau is eliminated would have probably declined. What is worse is that should this decline continue without an offset, there will be no economic growth guaranteed. So where can said offset come from? Well, just as there is a shadow banking system, so there is a traditional commercial bank system with listed liabilities. To be sure, for the duration of collapse in the shadow banking system, this has been the only offset, although granted one that is not nearly doing a good enough job. Specifically, total liabilities of Commercial Banks in Q2 were $13.4 trillion, an increase of $238 billion in the quarter. Alas, this is nowhere near enough to offset the decline in Shadow Banking, having grown by "only" $2.6 trillion since Q2 2008, even as shadow liabilities declined by double this amount. Yet there was a brief saving grace came in Q1 when the spike in Traditional liabilities more than offset the drop in Shadow, as the cumulative total rose by $337 billion, the most since 2008. Too bad, however, that adding across these two categories (second chart below), we once again witnessed a decline in Q2, amounting to $40.1 billion. This explains not only why QE2 could only do so much, but why GDP growth has rolled over and is now almost certainly negative. What is most important to keep in mind, is that Traditional Commercial Bank assets only grow courtesy of QE. And with Shadow banking continuing to implode, Commercial Banks have to pick up the slack or else... Which in turn means Bernanke has to keep pumping reserves. Whether banks use these to lend out, or to buy shares of Netflix is irrelevant: remember - America, and the entire developed world, is a credit driven system. Take away credit growth and it is game over. Which explains why tomorrow's decision is a formality: Bernanke has no choice but to continue offsetting the relentless contraction in shadow liabilities, which as of Q2 collapsed at an annualized rate of over $1 trillion. Incidentally this, +$1, is the very minimum that Bernanke will have to bring into reserve circulation to offset the relentless deleveraging of the once biggest contributor to American growth, which ironically is now the biggest adverse factor. That reversion to the mean sure can be a bitch. |
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Posted: 9/20/2011 11:14:27 AM EDT
[#7]
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What is most important to keep in mind, is that Traditional Commercial Bank assets only grow courtesy of QE. And with Shadow banking continuing to implode, Commercial Banks have to pick up the slack or else... Which in turn means Bernanke has to keep pumping reserves. Whether banks use these to lend out, or to buy shares of Netflix is irrelevant: remember - America, and the entire developed world, is a credit driven system. Take away credit growth and it is game over. Link |
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Posted: 9/20/2011 11:30:20 AM EDT
[#8]
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Shhh, he's fragile, and still likely has access to this thread. Sherrick got back bone and he'll not back down when he thinks he's right.
I admire that in him! He's probably not paying to much attention to this stuff anymore. He has a far greater blessing to spend his time on now.
I know he had an addition to his family. Did he get the Ban Hammer? I think it would be preferred that he left of his own Geneva Accord. It appears that he did, since just yesterday he started a thread in GD about how his newborn wasn't tactical enough.
I'm glad he didn't get locked out of the discussion. He may be an arrogant sonofabitch, but he's OUR arrogant sonofabitch. Sherrick doesn't need me to defend him, so I won't. But he is as important to this thread as anyone. If he's not just taking a break, this thread will go downhill rapidly. YMMV |
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Posted: 9/20/2011 1:08:51 PM EDT
[#9]
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I see our socialist leader has decided Solyndra and a few other of his carefully chosen backers deserve more than these piddly $500 million dollar loans, so he's decided to take it upon himself to soak some more out of what he considers "the rich". It won't end until the SOB is all the SOBs are out of DC. Most here are blaming just one man, Obama, for the way this country is spiraling the drain. It's a massive number of bought and paid for politicians in Washington DC that also share the blame. Our gov't is no longer of the people. It takes a mega millionaire or someone who is owned by a rich individual or group to become elected. Until that changes, and we have an unbiased news media, we are going to continue being fucked by the crooks in Washington. The problem is Progressivism. Republicans own their fair share of that They talk the game of smaller gov't but often vote the opposite. Yep. |
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Posted: 9/20/2011 4:14:41 PM EDT
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I see our socialist leader has decided Solyndra and a few other of his carefully chosen backers deserve more than these piddly $500 million dollar loans, so he's decided to take it upon himself to soak some more out of what he considers "the rich". It won't end until the SOB is all the SOBs are out of DC. Most here are blaming just one man, Obama, for the way this country is spiraling the drain. It's a massive number of bought and paid for politicians in Washington DC that also share the blame. Our gov't is no longer of the people. It takes a mega millionaire or someone who is owned by a rich individual or group to become elected. Until that changes, and we have an unbiased news media, we are going to continue being fucked by the crooks in Washington. The problem is Progressivism. Republicans own their fair share of that They talk the game of smaller gov't but often vote the opposite. Yep. Until more people realize we have gov't influence OPENLY for sale in this nation, regardless of party, gov't will continue to reassure us things will get better while they are emptying our bank accounts. And our future. |
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Posted: 9/20/2011 5:04:02 PM EDT
[#11]
^
X-Ring, dead center. |
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Posted: 9/20/2011 5:21:07 PM EDT
[#12]
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X-Ring, dead center. Realize ? More like admit. Everybody with two synapses firing knows rhe only difference between here and Mexico is here we have cleaner drinking water. 
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Posted: 9/20/2011 5:44:34 PM EDT
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X-Ring, dead center. Realize ? More like admit. Everybody with two synapses firing knows rhe only difference between here and Mexico is here we have cleaner drinking water.
For now.
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Posted: 9/20/2011 9:58:07 PM EDT
[#14]
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What is most important to keep in mind, is that Traditional Commercial Bank assets only grow courtesy of QE. And with Shadow banking continuing to implode, Commercial Banks have to pick up the slack or else... Which in turn means Bernanke has to keep pumping reserves. Whether banks use these to lend out, or to buy shares of Netflix is irrelevant: remember - America, and the entire developed world, is a credit driven system. Take away credit growth and it is game over. Link Quoted:
From: You Ain't Seen Bad Yet But It's Comin'- OFFICIAL Part 6, pg. 9, 7/7/2010 What makes this financial event so dangerous is the fact that it has scored a direct hit on that very mechanism -CREDIT (DEBT) EXPANSION, which our nation currently depends on for the generation of economic growth.  I submit to you that explosive and catastrophic collapse of the greater part of our economy having debt expansion as it's foundation remains as great a threat today, as it was when the financial crisis manifested in 2008. -and presently, the threat yet abides...
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Posted: 9/21/2011 9:17:55 AM EDT
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Shhh, he's fragile, and still likely has access to this thread. Sherrick got back bone and he'll not back down when he thinks he's right.
I admire that in him! He's probably not paying to much attention to this stuff anymore. He has a far greater blessing to spend his time on now.
I know he had an addition to his family. Did he get the Ban Hammer? I think it would be preferred that he left of his own Geneva Accord. It appears that he did, since just yesterday he started a thread in GD about how his newborn wasn't tactical enough.
I'm glad he didn't get locked out of the discussion. He may be an arrogant sonofabitch, but he's OUR arrogant sonofabitch. You use the word arrogant as if it's a bad thing. I think it's a personal asset.
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Posted: 9/21/2011 9:20:47 AM EDT
[#16]
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What is most important to keep in mind, is that Traditional Commercial Bank assets only grow courtesy of QE. And with Shadow banking continuing to implode, Commercial Banks have to pick up the slack or else... Which in turn means Bernanke has to keep pumping reserves. Whether banks use these to lend out, or to buy shares of Netflix is irrelevant: remember - America, and the entire developed world, is a credit driven system. Take away credit growth and it is game over. Link substitute the word credit for what it really is.....debt and we can see why it's end game. |
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Posted: 9/21/2011 9:29:10 AM EDT
[#17]
This may not actually be carried out given the track record of the Greek government in meeting it's commitments but it does give a flavor of what we all may be looking at domestically when austerity is forced on us.
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––- Meet Greek Austerity...At Long Last Well it seems the impending maturities of GGBs has forced the Greek's hands as they drag austerity measures into the here and now - and in dramatic manner. *GREEK PENSION CUT FOR THOSE EARNING MORE THAN EU1,200 A MONTH *GREECE TO REDUCE TAX-FREE THRESHOLD TO EU5,000 FROM EU8,000 *GREECE TO REDUCE PENSIONS BY 40% FOR THOSE UNDER 55 *GREECE TO CUT WAGES OF 30,000 STATE WORKERS THIS YEAR *GREECE TO CUT PENSIONS OVER EU1,200 BY 20% STATEMENT BY MINISTER OF STATE AND GOVERNMENT REPRESENTATIVE Elias Mossialos The Cabinet now refined the measures that lead to achieving the fiscal targets for 2011 and 2012 and allow the full implementation of the support of the Greek economy by 2014. The discussions with the Troika will be completed - announced yesterday - after the arrival of the chief in Athens at the beginning of next week. But it is absolutely essential given the country's strategic choice to make again a financial independent and equal country - member of the eurozone as soon as possible to reach a primary surplus. These options and send to our partners and markets the message that Greece and is willing and able to fulfill its obligations, remaining always the hard core of the euro and the European Union. Since the Greek people should have a clear view for a number of issues that are the subject of uncontrolled speculation, the Government announced early today the clear framework of critical decisions: A) The tax-free threshold is placed at 5,000 thousand euro, the average level of member eurozone. B) The new pay scale - vathmologio is really unified, meritocratic, transparent and fair while giving incentives to increase productivity and efficiency of public administration and its executives. C) There occurs no reduction in pensions of up to 1,200 euros. To achieve this will be cut 20% of the amount exceeding 1,200 euros in order to ensure proportionality and the internal justice system. Especially for retirees under 55 years until they reach the age of 55, will be cut by 40% portion of the pension that exceeds 1,000 euros. D) The institution of labor redundancy will be applied to the end of 2011 to qualify for this 30,000 employees in Government and the wider public sector through the application of merit and transparent criteria under the supervision of ASEP to identify the truly overstaffed. This concerns a total of about 3% of workers in the public and broader public sector. E) The Cabinet also took a series of decisions to promote structural changes and especially privatization, opening the professions and the labor market and the restructuring of the parastatal. F) The national tax system that will be voted on until October to give a definitive end to a series of injustices and inequalities that prevail for decades and which undermine social cohesion and development of the country. |
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Posted: 9/21/2011 9:46:11 AM EDT
[#18]
And the winners of today's downgrades are........
Suck It Up Warren - Moody's Downgrades Bank Of America From A2 To Baa1 Double Tap For Octogenarian Of Omaha: Wells Downgraded From A1 To A2 Moody's Goes For Trifecta, Downgrades Citi Short-Term Rating Of Citi From Prime-1 To Prime-2 Bank Downgrades Jump The Atlantic: S&P Cuts Numerous Italian Banks Just so the Italian banks don't feel isolated and get more than their fair share of intraday limit down closes, here comes S&P, via Bloomberg: * S&P Cuts Ratings on 15 Italian Banks After Italy Downgrade * S&P cuts Intesa Sanpaolo ratings to A from A+; outlook negative * S&P cuts Mediobanca ratings to A from A+; outlook negative * UniCredit Spa Rating Outlook to Negative by S&P * Findomestic Banca Cut to A From A+ by S&P |
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Posted: 9/21/2011 10:23:20 AM EDT
[#19]
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X-Ring, dead center. Realize ? More like admit. Everybody with two synapses firing knows rhe only difference between here and Mexico is here we have cleaner drinking water.
HA! Even that seems suspect nowadays. I like to stick to the same rule here as when I'm in Mexico: only drink the bottled beer
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Posted: 9/21/2011 1:19:04 PM EDT
[#20]
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Does Mr. Market know something everyone else doesn't about the FOMC meeting today and tomorrow? I'm betting on a QE3 announcement (figuratively). Not like Bernanke has any other irrational choice. After seeing the market tank in the last 20 minutes yesterday, on a day when it was irrationally up for almost the whole session, I was doubtful on QE3. I figured the "no" must have been leaked and GS was getting in ahead of the crowd. Then last night ZeroHedge had a long barfalicious article hinting that it was obvious Bernanke would have to do a trillion in QE3 and that it was a lock. So I thought, shit, maybe I was wrong. Today, the market was down pretty much the whole day and I thought it was a good sign that the announcement would at least disappoint the market. Then, before the announcement was even made, the market dropped 100, and I figured WOOHOO! And sure enough, WHAM. I've got to start trusting my own instincts more than these fucking smartasses on the big blogs. Yes, the information leaked. That's why the market dropped yesterday and all day today, right up until the hammer fell at 2pm-ish Eastern. |
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Posted: 9/21/2011 2:02:36 PM EDT
[#21]
Mr. Market didn't get the heroin injection he "needed", so he is throwing a tantrum.
Twist doesn't refill the feed trough with fresh injections of free money, it just rearranges the garbage left in the trough. |
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Posted: 9/21/2011 3:59:09 PM EDT
[#22]
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Mr. Market didn't get the heroin injection he "needed", so he is throwing a tantrum. Twist doesn't refill the feed trough with fresh injections of free money, it just rearranges the garbage left in the trough. What I find especially fucking stupid about Twist is that the Fed is buying 30-years at a time when rates are insanely low. They should be selling as many as they can to lock in the low rates while they last. |
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Posted: 9/21/2011 6:05:26 PM EDT
[#23]
The financial media has been talking about Operation Twist for a while now. I'm a financial media junkie, including podcasts like King World News and Financial Sense. The first mention of OT I recall was on a King World News podcast featuring Jim Rickards on August 23.
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/8/23_Jim_Rickards.html About 11:50 into that interview he introduces and explains the idea of OT. This was almost a month ago. I think he sniffed it out before anyone else. King World News is a flaming gold pumper, but in this environment they're on the right side of the trade. Many smart guests, highly recommended. Usually a good bunch of interviews posted Saturday mornings. http://www.kingworldnews.com/kingworldnews/Broadcast/Broadcast.html |
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Posted: 9/22/2011 3:53:54 AM EDT
[#24]
U.S. Stock Futures Drop as Global Risks Grow
Sep 22, 2011 7:23 AM ET U.S. stock-index futures dropped, signaling the Standard & Poor’s 500 Index may fall for a fourth day, amid concern global economic growth is slowing and that banks may find it increasingly difficult to obtain funding. Bank of America Corp. (BAC), the biggest U.S. lender, lost 3.6 percent and Wells Fargo & Co. (WFC) declined 3 percent in pre-market New York trading. Futures on the S&P 500 expiring in December dropped 2.5 percent to 1,126.6 at 7:21 a.m. in New York, reversing an earlier gain. Contracts on the Dow Jones Industrial Average retreated 242 points, or 2.2 percent, to 10,765. The MSCI All- Country World Index of emerging market and developed market stocks slid 2.6 percent, extending its decline from the May 2 high to more than 20 percent. If the gauge closes at its current level it will have entered a so-called bear market. “Under the surface, we are moving quickly into a secondary credit crisis,” said Angus Gluskie, who manages more than $300 million at White Funds Management in Sydney. “All underlying measures of credit risk are rising and there are numerous examples of banks having to resort to unusual measures to obtain funding.” U.S. futures accelerated their declines as a report showed China’s manufacturing may contract for a third month in September as measures of export orders and output decline. The preliminary reading of 49.4 for a manufacturing index released by HSBC Holdings Plc and Markit Economics today compares with the final reading of 49.9 for August and 49.3 for July. A reading below 50 indicates a contraction. |
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Posted: 9/22/2011 4:28:38 AM EDT
[#25]
Can someone state in layman's terms what policy the Fed announced yesterday? Buying long-term bonds but selling short-term ones? Is that right? To what effect?
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Posted: 9/22/2011 4:41:32 AM EDT
[#26]
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Can someone state in layman's terms what policy the Fed announced yesterday? Buying long-term bonds but selling short-term ones? Is that right? To what effect? Operation Twist The Federal Open Market Committee action known as Operation Twist (named for the Twist dance craze of the time[1]) began in 1961. The intent was to flatten the yield curve in order to promote capital inflows and strengthen the dollar. The Fed utilized open market operations to shorten the maturity of public debt in the open market. It performs the 'twist' by selling some of the short term debt (with three years or less to maturity) it purchased as part of the quantitative easing policy back into the market and using the money received from this to buy longer term government debt. Although this action was marginally successful in reducing the spread between long-term maturities and short-term maturities, some economists have suggested it did not continue for a sufficient period of time to be effective.[2] Despite being considered a failure in near-term analyses, the action has subsequently been reexamined in isolation and certain economists have suggested it was more effective than originally thought.[1] As a result of this reappraisal, similar action has been suggested as an alternative to quantitative easing by central banks.[1] The Federal Open Market Committee concluded its September 21, 2011 Meeting at about 2:15PM EDT by announcing the implementation of Operation Twist. This is a plan to purchase $400 billion of bonds with maturities of 6 to 30 years and selling bonds with maturities less than 3 years, thereby extending the average maturity. [3]. This is an attempt to do what Quantitative Easing (QE) tries to do, without printing more money and expanding the Fed's balance sheet and therefore avoid the inflationary pressure that QE brings. [4] This announcement brought a bout of risk aversion seen in the equity markets, and strengthened the US Dollar, whereas QE II had weakened the USD and supported the equity markets |
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Posted: 9/22/2011 4:47:16 AM EDT
[#27]
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Can someone state in layman's terms what policy the Fed announced yesterday? Buying long-term bonds but selling short-term ones? Is that right? To what effect? Operation Twist |
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Posted: 9/22/2011 4:48:46 AM EDT
[#28]
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Can someone state in layman's terms what policy the Fed announced yesterday? Buying long-term bonds but selling short-term ones? Is that right? To what effect? This is my conjecture. The fed has been buying long term US debt for a while now. By buying long term bonds, it will be 30 years before the US treasury has to refi that debt. The fed reserve, being not ever audited and a private company can invest in anything they want and nobody ever knows what they invest in. The rub here is that the fed reserve doesn't ever have to make a profit on their investments. They are the sole printer of US money. They create money to loan to banks when ever they want. They create US noney policy. Why would they need to turn a profit when they are the ones that MAKE the money whenever they need it. The simple answer is they don't need to make a profit when they can make the money when ever they want. Did I mention they never get audited? Now that we know they never get audited and they don't need to make a profit because they create the money, there is one more point to ponder. US debt does not ever have to be repaid until it is presented to the trasury to be redeemed. Just like you can buy a US savings bond and hold on to it well past the maturity date and gain no more interest, while you have it in your possession, the US treasury does not have to pay that bond. So too can the fed, buy 30 year treasury notes and after they mature in 30 years, they don't ever have to redeem them to the US treasury. Why? Because they don't need to make a profit. Why? Because they have the sole gig of creating US dollars at will. Bringing the matured US notes to the Treasury for redemption so the Treasury must pay the note is counter productive to the fed. the fed doesn't need the profit, because they make the money and it could just kill the golden goose and end the fed's best gig in the world of being able to create at will the world's reserve currency. My contention is that the fed is buying 30 year treasury notes and will never redeem them to be paid. As a result, the treasury never has to refi that debt and never has to pay the interest on that debt. The fed just holds the debt as an asset on their books and everybody is happy and since they are never audited, nobody knows how much US debt they have or are holding past maturity so that the US govt never has to make good on that debt. I think that is the plan. It's a perfect plan for the situation we are in. It's a way to kick the can down the road for almost ever. |
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Posted: 9/22/2011 4:51:55 AM EDT
[#29]
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Can someone state in layman's terms what policy the Fed announced yesterday? Buying long-term bonds but selling short-term ones? Is that right? To what effect? Operation Twist The Federal Open Market Committee action known as Operation Twist (named for the Twist dance craze of the time[1]) began in 1961. The intent was to flatten the yield curve in order to promote capital inflows and strengthen the dollar. The Fed utilized open market operations to shorten the maturity of public debt in the open market. It performs the 'twist' by selling some of the short term debt (with three years or less to maturity) it purchased as part of the quantitative easing policy back into the market and using the money received from this to buy longer term government debt. Although this action was marginally successful in reducing the spread between long-term maturities and short-term maturities, some economists have suggested it did not continue for a sufficient period of time to be effective.[2] Despite being considered a failure in near-term analyses, the action has subsequently been reexamined in isolation and certain economists have suggested it was more effective than originally thought.[1] As a result of this reappraisal, similar action has been suggested as an alternative to quantitative easing by central banks.[1] The Federal Open Market Committee concluded its September 21, 2011 Meeting at about 2:15PM EDT by announcing the implementation of Operation Twist. This is a plan to purchase $400 billion of bonds with maturities of 6 to 30 years and selling bonds with maturities less than 3 years, thereby extending the average maturity. [3]. This is an attempt to do what Quantitative Easing (QE) tries to do, without printing more money and expanding the Fed's balance sheet and therefore avoid the inflationary pressure that QE brings. [4] This announcement brought a bout of risk aversion seen in the equity markets, and strengthened the US Dollar, whereas QE II had weakened the USD and supported the equity markets This is nothing more than using one credit card to pay for another. |
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Posted: 9/22/2011 5:32:24 AM EDT
[#30]
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Can someone state in layman's terms what policy the Fed announced yesterday? Buying long-term bonds but selling short-term ones? Is that right? To what effect? Operation Twist The Federal Open Market Committee action known as Operation Twist (named for the Twist dance craze of the time[1]) began in 1961. The intent was to flatten the yield curve in order to promote capital inflows and strengthen the dollar. The Fed utilized open market operations to shorten the maturity of public debt in the open market. It performs the 'twist' by selling some of the short term debt (with three years or less to maturity) it purchased as part of the quantitative easing policy back into the market and using the money received from this to buy longer term government debt. Although this action was marginally successful in reducing the spread between long-term maturities and short-term maturities, some economists have suggested it did not continue for a sufficient period of time to be effective.[2] Despite being considered a failure in near-term analyses, the action has subsequently been reexamined in isolation and certain economists have suggested it was more effective than originally thought.[1] As a result of this reappraisal, similar action has been suggested as an alternative to quantitative easing by central banks.[1] The Federal Open Market Committee concluded its September 21, 2011 Meeting at about 2:15PM EDT by announcing the implementation of Operation Twist. This is a plan to purchase $400 billion of bonds with maturities of 6 to 30 years and selling bonds with maturities less than 3 years, thereby extending the average maturity. [3]. This is an attempt to do what Quantitative Easing (QE) tries to do, without printing more money and expanding the Fed's balance sheet and therefore avoid the inflationary pressure that QE brings. [4] This announcement brought a bout of risk aversion seen in the equity markets, and strengthened the US Dollar, whereas QE II had weakened the USD and supported the equity markets This is nothing more than using one credit card to pay for another. Someone needs to buy the bonds to feed a $1.6 trillion yearly budget deficit. A $400 billion shell game won't even come close and the Chinese have their own problems to worry about as does the EU, Japan etc. This is a short term stop gap measure at best, the fireworks are yet to come.... |
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Posted: 9/22/2011 5:46:46 AM EDT
[#31]
Quoted:
Quoted:
Quoted:
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Can someone state in layman's terms what policy the Fed announced yesterday? Buying long-term bonds but selling short-term ones? Is that right? To what effect? Operation Twist The Federal Open Market Committee action known as Operation Twist (named for the Twist dance craze of the time[1]) began in 1961. The intent was to flatten the yield curve in order to promote capital inflows and strengthen the dollar. The Fed utilized open market operations to shorten the maturity of public debt in the open market. It performs the 'twist' by selling some of the short term debt (with three years or less to maturity) it purchased as part of the quantitative easing policy back into the market and using the money received from this to buy longer term government debt. Although this action was marginally successful in reducing the spread between long-term maturities and short-term maturities, some economists have suggested it did not continue for a sufficient period of time to be effective.[2] Despite being considered a failure in near-term analyses, the action has subsequently been reexamined in isolation and certain economists have suggested it was more effective than originally thought.[1] As a result of this reappraisal, similar action has been suggested as an alternative to quantitative easing by central banks.[1] The Federal Open Market Committee concluded its September 21, 2011 Meeting at about 2:15PM EDT by announcing the implementation of Operation Twist. This is a plan to purchase $400 billion of bonds with maturities of 6 to 30 years and selling bonds with maturities less than 3 years, thereby extending the average maturity. [3]. This is an attempt to do what Quantitative Easing (QE) tries to do, without printing more money and expanding the Fed's balance sheet and therefore avoid the inflationary pressure that QE brings. [4] This announcement brought a bout of risk aversion seen in the equity markets, and strengthened the US Dollar, whereas QE II had weakened the USD and supported the equity markets This is nothing more than using one credit card to pay for another. Someone needs to buy the bonds to feed a $1.6 trillion yearly budget deficit. A $400 billion shell game won't even come close and the Chinese have their own problems to worry about as does the EU, Japan etc. This is a short term stop gap measure at best, the fireworks are yet to come.... The fed didn't become the owner of 5.5 trillion dollars of treasury debt by not buying US treasuries. Don't confuse what they say publicly with what they do when nobody is looking. The fed has been the primary buyer of US debt for several years now and will continue to do so, they just aren't talking about it. |
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Posted: 9/22/2011 5:54:32 AM EDT
[#32]
Quoted:
The fed didn't become the owner of 5.5 trillion dollars of treasury debt by not buying US treasuries. Don't confuse what they say publicly with what they do when nobody is looking. The fed has been the primary buyer of US debt for several years now and will continue to do so, they just aren't talking about it. How do you hide hundreds of billions of $$$? I know they have been BIG buyers but can they hide purchases of that size? Dow down 360 as I type |
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Posted: 9/22/2011 6:40:55 AM EDT
[#33]
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Quoted:
The fed didn't become the owner of 5.5 trillion dollars of treasury debt by not buying US treasuries. Don't confuse what they say publicly with what they do when nobody is looking. The fed has been the primary buyer of US debt for several years now and will continue to do so, they just aren't talking about it. How do you hide hundreds of billions of $$$? I know they have been BIG buyers but can they hide purchases of that size? Dow down 360 as I type Notice that the Govt no longer reports who the buyers of treasury debt are like they used to. Just that the debt was sold and at what rate. They used to report the buyer, now they don't. The fed never gets audited and they are free to buy and invest in what ever they want. I's not about hiding, it's about not reporting it. How did they get som much self reported US treasuries to begin with? They bought them. |
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Posted: 9/22/2011 6:49:05 AM EDT
[#34]
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The fed didn't become the owner of 5.5 trillion dollars of treasury debt by not buying US treasuries. Don't confuse what they say publicly with what they do when nobody is looking. The fed has been the primary buyer of US debt for several years now and will continue to do so, they just aren't talking about it. How do you hide hundreds of billions of $$$? I know they have been BIG buyers but can they hide purchases of that size? Dow down 360 as I type Read This |
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Posted: 9/22/2011 7:13:00 AM EDT
[#35]
I think operation twist = "ring all the money out of equity holders"
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Posted: 9/22/2011 8:14:44 AM EDT
[#36]
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Can someone state in layman's terms what policy the Fed announced yesterday? Buying long-term bonds but selling short-term ones? Is that right? To what effect? This is my conjecture. The fed has been buying long term US debt for a while now. By buying long term bonds, it will be 30 years before the US treasury has to refi that debt. The fed reserve, being not ever audited and a private company can invest in anything they want and nobody ever knows what they invest in. The rub here is that the fed reserve doesn't ever have to make a profit on their investments. They are the sole printer of US money. They create money to loan to banks when ever they want. They create US noney policy. Why would they need to turn a profit when they are the ones that MAKE the money whenever they need it. The simple answer is they don't need to make a profit when they can make the money when ever they want. Did I mention they never get audited? Now that we know they never get audited and they don't need to make a profit because they create the money, there is one more point to ponder. US debt does not ever have to be repaid until it is presented to the trasury to be redeemed. Just like you can buy a US savings bond and hold on to it well past the maturity date and gain no more interest, while you have it in your possession, the US treasury does not have to pay that bond. So too can the fed, buy 30 year treasury notes and after they mature in 30 years, they don't ever have to redeem them to the US treasury. Why? Because they don't need to make a profit. Why? Because they have the sole gig of creating US dollars at will. Bringing the matured US notes to the Treasury for redemption so the Treasury must pay the note is counter productive to the fed. the fed doesn't need the profit, because they make the money and it could just kill the golden goose and end the fed's best gig in the world of being able to create at will the world's reserve currency. My contention is that the fed is buying 30 year treasury notes and will never redeem them to be paid. As a result, the treasury never has to refi that debt and never has to pay the interest on that debt. The fed just holds the debt as an asset on their books and everybody is happy and since they are never audited, nobody knows how much US debt they have or are holding past maturity so that the US govt never has to make good on that debt. I think that is the plan. It's a perfect plan for the situation we are in. It's a way to kick the can down the road for almost ever. Which leads to the question - is the USA in reality too big too fail? IOW, what pressures could be brought against us economically to force the Fed to have to submit those bonds for payment? |
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Posted: 9/22/2011 8:28:27 AM EDT
[#37]
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The fed didn't become the owner of 5.5 trillion dollars of treasury debt by not buying US treasuries. Don't confuse what they say publicly with what they do when nobody is looking. The fed has been the primary buyer of US debt for several years now and will continue to do so, they just aren't talking about it. How do you hide hundreds of billions of $$$? I know they have been BIG buyers but can they hide purchases of that size? Dow down 360 as I type Read This Mach, I have read similar before, I'm still in disbelief that the Fed can hide that much QE but it is clear someone is bankrolling the treasury auction purchasing since we haven't had a failed auction, yet. |
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Posted: 9/22/2011 8:31:41 AM EDT
[#38]
Dow is down over 400, I don't think we will see a late day rally saving this print today.
Almost every commodity is down today including foods, oil, copper, PMs you name and it's being sold. |
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Posted: 9/22/2011 8:39:25 AM EDT
[#39]
You ain't seen bad yet BUT IT'S COMIN'.
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Posted: 9/22/2011 9:12:24 AM EDT
[#40]
Quoted:
Dow is down over 400, I don't think we will see a late day rally saving this print today. Almost every commodity is down today including foods, oil, copper, PMs you name and it's being sold. And they're having to sell cows in Texas due to the drought. Sh*t happens and it causes other sh*t to happen. From where I sit, our problem is ... We've been caught off guard as our education system (with few exceptions) has slowly modified itself to produce entitlement fiends and dumbazzes (see the stats compared to rest of 8,000 mile diameter planet.). We've been caught off guard as government employees slowly crawled their upkeep costs beyond the point of no return regarding taxpayer carrying capacity. We've been caught off guard as political candidates from both sides decided they were pro-sports figures that didn't give a sh*t for their team, only about their big check cashing. We've been caught off guard as the entire U.S. government grabbed the taxpayer's credit cards and went on a wild spending spree on themselves, and haven't been located, much less stopped yet. We have good excuses, we were busy trying to pay down the ever burdening tax mountain piled slowly on us. Don't * Feed * The * Bears |
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Posted: 9/22/2011 9:20:56 AM EDT
[#41]
Well put Mark!
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Posted: 9/22/2011 9:29:42 AM EDT
[#42]
Global Meltdown: Investors Are Dumping Nearly Everything
Posted from CNBC strictly for the headline. Mr. Market's withdrawal tantrum continues unabated. |
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Posted: 9/22/2011 9:38:59 AM EDT
[#43]
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Dow is down over 400, I don't think we will see a late day rally saving this print today. Almost every commodity is down today including foods, oil, copper, PMs you name and it's being sold. And they're having to sell cows in Texas due to the drought. Sh*t happens and it causes other sh*t to happen. From where I sit, our problem is ... We've been caught off guard as our education system (with few exceptions) has slowly modified itself to produce entitlement fiends and dumbazzes (see the stats compared to rest of 8,000 mile diameter planet.). We've been caught off guard as government employees slowly crawled their upkeep costs beyond the point of no return regarding taxpayer carrying capacity. We've been caught off guard as political candidates from both sides decided they were pro-sports figures that didn't give a sh*t for their team, only about their big check cashing. We've been caught off guard as the entire U.S. government grabbed the taxpayer's credit cards and went on a wild spending spree on themselves, and haven't been located, much less stopped yet. We have good excuses, we were busy trying to pay down the ever burdening tax mountain piled slowly on us. Don't * Feed * The * Bears Well said! I'd ask about your newsletter, but I'm already subscribed... Posted Via AR15.Com Mobile |
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Posted: 9/22/2011 10:03:08 AM EDT
[#44]
Quoted:
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Dow is down over 400, I don't think we will see a late day rally saving this print today. Almost every commodity is down today including foods, oil, copper, PMs you name and it's being sold. And they're having to sell cows in Texas due to the drought. Sh*t happens and it causes other sh*t to happen. From where I sit, our problem is ... We've been caught off guard as our education system (with few exceptions) has slowly modified itself to produce entitlement fiends and dumbazzes (see the stats compared to rest of 8,000 mile diameter planet.). We've been caught off guard as government employees slowly crawled their upkeep costs beyond the point of no return regarding taxpayer carrying capacity. We've been caught off guard as political candidates from both sides decided they were pro-sports figures that didn't give a sh*t for their team, only about their big check cashing. We've been caught off guard as the entire U.S. government grabbed the taxpayer's credit cards and went on a wild spending spree on themselves, and haven't been located, much less stopped yet. We have good excuses, we were busy trying to pay down the ever burdening tax mountain piled slowly on us. Don't * Feed * The * Bears I'm in my mid 50s and have watched it first hand. Who do we blame? "no rain drop ever takes credit for the flood" It's beginning to look like a downpour to me, flood to follow.... |
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Posted: 9/22/2011 10:29:33 AM EDT
[#45]
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^
X-Ring, dead center. Realize ? More like admit. Everybody with two synapses firing knows rhe only difference between here and Mexico is here we have cleaner drinking water.
nice to have a little levity in a depressing thread...... Damnit, Mark, I choked on my coffee and spilled some on my shirt!  
Im interested to see how the Plunge Protection Team lets the day finish...... |
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Posted: 9/22/2011 10:37:45 AM EDT
[#46]
Bernanke and his Keynesonists horde's days are numbered. The big money in the world have been let down by their crack (dollar) dealer.
Either the dealer caves or everything else caves in. If he doesn't feed the junkies before November 2012, those elections and the aftermath will be even more interesting than I had anticipated. How will the people react to the hybrid congress we have now? Will we get another BuBama, another D with an R next to their name, or a cameleon? How many more useless laws will be added to protect us from what is happening, instead of trying to change why it happened? Will there be more than a handful in congress that no why it happened? Will Bernanke's replacement be better or worse? Is the can finally running out of road.....? I have my own answers to these questions. What a horrible/great time to be alive to witness this... |
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Posted: 9/22/2011 11:02:55 AM EDT
[#47]
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The fed didn't become the owner of 5.5 trillion dollars of treasury debt by not buying US treasuries. Don't confuse what they say publicly with what they do when nobody is looking. The fed has been the primary buyer of US debt for several years now and will continue to do so, they just aren't talking about it. How do you hide hundreds of billions of $$$? I know they have been BIG buyers but can they hide purchases of that size? Dow down 360 as I type Read This Mach, I have read similar before, I'm still in disbelief that the Fed can hide that much QE but it is clear someone is bankrolling the treasury auction purchasing since we haven't had a failed auction, yet. I know it's just conjecture on my part, but who else has the means and the motive and doesn't get audited. They hid 8 trillion in overnight loans in Sep 2008 and didn't acknowledge it for over 2 years. I think they can hide a lot. They have to account for some of it, but they certainly don't have to account for all of it. maybe they aren't hiding it. Maybe the Congressional Finance committees and the Treasury know exactly what is going on? |
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Posted: 9/22/2011 11:04:37 AM EDT
[#48]
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Dow is down over 400, I don't think we will see a late day rally saving this print today. Almost every commodity is down today including foods, oil, copper, PMs you name and it's being sold. And they're having to sell cows in Texas due to the drought. Don't * Feed * The * Bears This is the key. |
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Posted: 9/22/2011 11:25:23 AM EDT
[#49]
-500 and counting
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Posted: 9/22/2011 12:16:25 PM EDT
[#50]
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-500 and counting Plunge team kicked in at the last moment but they could only bring it up around 100 points. Lots of red across the board. It'll go up tomorrow, you'll get some buy in's and gamblers but there is NOTHING that is realistic about the market anymore. I'm not even that sure about the lowered expectations for the Christmas season because a lot of people are finally figuring out that debt for presents is a stupid idea and any more debt [household debt] is just idiotic. |
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