The Fed seems to have decided to split a loaf on the conservative side, coming in with less QE than the market’s hopes, at $600 billion, but one might cynically surmise above the low end expectation of $500 billion.
Side by side comparison of this FOMC statement with the next most recent courtesy Andrew Horowitz of The Disciplined Investor (you can also view it here):
Fed Side by Side November v. September 2010
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Translation …
We intend to keep the intentional herd thinning Control Driven Pernicious Greed in effect and we have no intention of returning to our chartering mandate the old fashioned Profit Driven Vanilla Greed.
All of your assets will continue to deflate while food and energy costs will correspondingly increase as the well planned perpetual conflict in the masses escalates.
As a crumb to the old fashioned fart suckers, Hoenig keeps the Profit Driven Vanilla Greed scam on life support by voting against the policy.
Say good bye to the middle and under classes and say hello to the new ruler and ruled world …
But don’t worry scamerican suckers, you can vote in two more years!
Deception is the strongest political force on the planet.
>> But don’t worry scamerican suckers, you can vote in two more years! <<
Thank you for the reassurance, my friend… :)
Psychoanalystus
Where precisely, in the Fed’s charter, is it authorized to buy MBS, particularly MBS in an environment of rampant fraud. Aren’t they limited to high quality investments? Yeah, I know this ground has been ploughed and furrowed, but dammit, its still illegal.
The Fed Charter is to be found in every air port full body cavity scanner. Copies are also on file in Homeland Security, The FBI, The IRS, The 82nd Air Borne, The Joint Special Forces Command, The NSA, The DIA, and misc client states, Israel, Syria, S Korea etc. and the Stans.{former glorious Soviet Republics that lead world in phosphate and potassium production}.
This is not an MBS purchase program but a Treasury security purchase program.
Anyone cruising on this ship, QE2?
How do we know if they don’t really put you on the Titanic?
I think I’m boarding KG2 asap… King Gold
Psychoanalystus
When I think that the entire US economy has a single failure point in the Fed Chairman, it boils my blood.
Amount is greater than $600 billion if you read NY FED statement, @ $800 billion considering reinvestment.
How is this not check kiting? The FED is not federal and has no reserves. Sigh
I was underwhelmed by the FOMC’s QEII declaration. I would think once speculators think this through, that is if they think anything through, they may start heading for the exits.
Gorelick on oil sounds like a Cornucopian goof. And who would link to Jeffrey Goldberg on anything? Or to repeat from elsewhere in the list of links. Asking Jeffrey Goldberg to disclaim on the real world is like asking Pol Pot to ….
He doesn’t like whole body scanners but is for every other aspect of our lives being probed. And, of course, being Jeffrey Goldberg he gets it wrong anyway, the scanners would not detect a bomb like that of the underwear bomber precisely because it wouldn’t show genitals. The real criticism of these systems is that they don’t work and are unnecessary invasions of our privacy. Compare this to the laissez-faire attitude toward air cargo monitoring. Some of us pointed out how wide open that was shortly after 9/11, nine years ago. It was swept under the carpet though because it was a big profit center for the airlines and they didn’t want anything to happen that might increase their costs and reduce their profit margins.
My neighbor is a pilot for a major airline. He has to go through the same stupid security scan as everyone else. Of course they let him carry a gun, he has full control of the aircraft, and there is a crash axe on the (PC term) “flight deck” (formerly cockpit) where he has easy access to it. Were he inclined to do something crazy or terroristic he certainly wouldn’t need a box cutter or even a pound of C-4. It just shows how idiotic the whole TSA thing is. The opportunity to hijack an airliner ended on 9/11 when the new paradigm was set and there is nothing they can do to stop you from blowing one up if you’re determined. So much for the need for the TSA. You’re no safer with them there but all the mouth breathers “feel” safer. Now I drive if it is less than 2,000 miles and there’s a road. It’s less hassle and certainly less invasive.
You can not condition cargo, although incrementally condition humans to new norms…eh.
To paraphrase Cato the Elder:
“Delenda Fed!”
QE is not the answer. It’s obvious that the source of the continuing economic downturn was (and still is) overpriced real estate. QE is generally intended to promote lending activity. That’s not going to happen because
a) there are no large scale safe lending opportunities –and-
b) there is no large scale loan demand for new investment opportunities(of any type)
In addition, QE is too broad-based of an approach. Think of the overpriced real estate situation as being similar to the problem faced by firefighters when attempting to battle a huge wildfire in Yellowstone. Set aside the argument as whether it is more environmentally beneficial to fight it or let it burn naturally, and assume that everyone agrees it needs to be suppressed.
What the firefighters don’t do is utilize their limited resources of water, fire suppressant chemicals, men and equipment and apply them evenly over the entire park- for obvious reasons. If they did, the effect of the impact on the actual burn area would be greatly diluted. Further, resources applied to all the areas not immediately threatened by the blaze are wasted because the effects will have dissipated long before the blaze reaches those areas.
QE is the economic equivalent of spraying our limited resources over the entire country. What’s needed is a more precise application of capital to those areas most heavily impacted by the real estate downturn- i.e. those areas with the largest number of underwater homeowners. If we assume that a majority of those were the result of the private label option arm, negative amort, low doc subprime RMBS pools that were originated between the years 2004 and early 2007, then resources should be applied most heavily to the geographic areas where those loans are most heavily concentrated- FLA, CA, NV and AZ.
Seems obvious to me that loan mods provide much better opportunity to focus the solution directly at the problem. In addition, it also provides an opportunity to set up an equity kicker (tax assessment), attached to those properties, whereby there is a extra capital gain or other tax that gets assessed on at least part of the gain recognized on any sales down the road. It’s not inconceivable, that within a decade all four regions (that have international demand in excess of many other parts of the country) could start to see significant price appreciation again. Only fair that there be a repayment of at least part of the cost of the rescue by those who benefited.
Vee r gerfuckt!
(My germanglish eeze nots zo gud deese daze.)
We should all be insulted by the Fed’s opinion of our intelligence. The statement says “but measures of underlying inflation have trended lower in recent quarters.” Take a quick look at the GDP report and you’ll see the inflation number they are using in the calculation is 1.1% in Q1, 2.0% in Q2, and 2.2% in Q3. I guess that’s the Feds definition of something trending lower. I’d call Bernanke a bald-faced lair but he has a beard, so I’ll settle for consummate lair.