What happened to all of the doom and gloom economic threads?

[trysail]

http://www.bloomberg.com/apps/chart?h=200&w=280&range=1y&type=gp_line&cfg=BQuoteComp_10.xml&ticks=USGG10YR%3AIND&img=png
USGG10YR:IND
10 Year Treasury YTM

Yields are yield to maturity and pre-tax. Indices have increased in precision as of 5/20/2008 to 4 decimal places. The rates are comprised of Generic United States on-the-run government bill/note/bond indices. These yields are based on the ask side of the market and are updated intraday. Pricing source: BGN.

http://noir.bloomberg.com/apps/cbuilder?ticker1=USGG10YR:IND

_____________________

http://www.bloomberg.com/apps/chart?h=200&w=280&range=1y&type=gp_line&cfg=BQuoteComp_10.xml&ticks=FDTR%3AIND&img=png
FDTR:IND
Fed Funds Target Rate US

At the Dec. 16th, 2008 meeting the Federal Reserve cut the main U.S. interest rate to "a target range" between zero and 0.25.

http://noir.bloomberg.com/apps/cbuilder?ticker1=FDTR:IND

______________________

http://www.bloomberg.com/apps/chart?h=200&w=280&range=1y&type=gp_line&cfg=BQuoteComp_10.xml&ticks=HOLDCH%3AIND&img=png
HOLDCH:IND
Chinese holdings of U.S. Treasury securities

Estimated foreign holdings of US Treasury marketable and nonmarketable securities. This index has a two month lag. For additional information, please see http://treasury.gov/tic/foihome.shtml

http://noir.bloomberg.com/apps/cbuilder?ticker1=HOLDCH:IND

​

Gross Says Treasury Yields Too Low as Fed Approaches QE2 End
By Susanne Walker

March 2 (Bloomberg) -- Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said yields on Treasuries may be too low to sustain demand for U.S. government debt as the Federal Reserve approaches the end of its second round of quantitative easing.

Treasury yields are about 150 basis points too low when viewed on a historical context and when compared with expected nominal gross domestic product growth of 5 percent, Gross wrote in a monthly investment outlook posted today on the Newport Beach, California-based company’s website. The Fed is scheduled to complete purchases of $600 billion of Treasuries in June.

“A successful handoff from public to private credit creation has yet to be accomplished,” Gross said. “That handoff ultimately will determine the outlook for real growth and the potential reversal in our astronomical deficits and escalating debt levels.”

Gross reduced in January the holdings of U.S. government and related debt in Pimco’s $239 billion Total Return Fund to the smallest proportion in two years. The securities were cut to 12 percent of assets, from 22 percent in December, according to a statement on the firm’s website Feb. 14. He advised investors last month to reduce holdings of Treasuries and U.K. gilts and buy higher-returning securities such as debt from emerging- market nations as central banks keep borrowing rates low.

Rising Yields
The “25 basis-point policy rates for an ‘extended period of time’ may not be enough to entice arbitrage Treasury buyers, nor bond fund asset allocators to reenter a Treasury market at today’s artificially low yields,” Gross wrote today. “Yields may have to go higher, maybe even much higher to attract buying interest.”

Ten-year Treasury yields have risen for each of the past six months, according to data compiled by Bloomberg, the longest run since June 2006, as the economy showed signs of improvement. Government securities handed investors a 0.1 percent loss last month, according to Bank of America Merrill Lynch indexes.

Yields on the 10-year note rose three basis points, or 0.03 percentage point, to 3.42 percent in New York at 10:15 a.m., according to BGCantor Market data.

Foreign Demand
The Fed sought to lower borrowing costs in a first round of quantitative easing that ended in March 2010 as it bought $1.75 trillion in securities, including $300 billion in Treasuries. The central bank kicked off another round of buying in November to sustain the economic recovery and prevent deflation.

“Nearly 70% of the annualized issuance since the beginning of QE II has been purchased by the Fed, with the balance absorbed by those old standbys - the Chinese, Japanese and other reserve surplus sovereigns,” Gross wrote, noting that yields may rise with the end of QE II as the Fed would be “ripping a Band- Aid off a partially healed scab.”

China’s investment in U.S. debt totaled $1.16 trillion at year-end, the Treasury Department reported Feb. 28. Japan maintained its place as America’s second-largest lender, with $882.3 billion of Treasuries at year-end.

Quantitative easing has worked so far, Gross wrote. Stock prices have nearly doubled since the first round of asset purchases were announced and the U.S. economy will likely expand by 4 percent this year amid a $1.5 trillion federal budget deficit, he added.

The U.S. economy grew at a 2.8 percent annual rate in the fourth quarter, slower than previously calculated, as state and local governments made deeper cuts in spending, Commerce Department data showed on Feb. 25. The initial estimated was for a 3.2 percent increase.

‘Artificial Foundation’
The U.S. added 190,000 jobs in February, the most since May 2010, according to the median forecast of 77 economists in a Bloomberg News survey before a Labor Department report on March 4. Private payrolls are forecast to rise by 200,000 while the unemployment rate is estimated at 9.1 percent, up from 9 percent. The government added 36,000 jobs in January.

“Bond yields and stock prices are resting on an artificial foundation of QE II credit that may or may not lead to a successful private market handoff and stability in currency and financial markets,” Gross wrote. If at the end of QE, “the private sector cannot stand on its own two legs - issuing debt at low yields and narrow credit spreads, creating the jobs necessary to reduce unemployment and instilling global confidence in the sanctity and stability of the U.S. dollar, - then the QEs will have been a colossal flop.”

more...

http://noir.bloomberg.com/apps/news?pid=20601087&sid=aNXmJnZc3iu4&pos=3

The breakeven rate for 10-year Treasury Inflation Protected Securities, the yield difference between this debt and comparable maturity Treasuries, rose to 2.57 percentage points on March 8, the highest since July 2008 and up from 1.63 percentage points on Aug. 27, the day Bernanke said additional securities purchases might be warranted. The rate is a measure of the outlook for consumer prices during the life of the securities.

http://www.bloomberg.com/apps/chart?h=200&w=280&range=1y&type=gp_line&cfg=BQuoteComp_10.xml&ticks=USGGBE10%3AIND&img=png​

USGGBE10:IND
http://noir.bloomberg.com/apps/cbuilder?ticker1=USGGBE10:IND
http://noir.bloomberg.com/apps/quote?ticker=USGGBE10:IND

Yields are yield to maturity and pre-tax. Indices have increased in precision as of 5/20/2008 to 4 decimal places. The rates are United States breakeven inflation rates. They are calculated by subtracting the real yield of the inflation linked maturity curve from the yield of the closest nominal Treasury maturity. The result is the implied inflation rate for the term of the stated maturity. Please see {YCGT0169 Index DES<GO>} 2<GO> for "Members" of the US Treasury Inflation Linked curve. You can locate the rates under {ILBE<GO>}.

...Fed policies are fueling asset bubbles in the stock and bond markets. Habeeb says he “doesn’t buy it at all” that the central bank will pull its stimulus in time, so he is being cautious about taking on what he regards as too much interest- rate or credit risk in his funds.

Extra Yield
...The extra yield, or spread, investors demand to own high-yield, high-risk securities instead of Treasuries has narrowed to 4.71 percentage points from 6.81 percentage points in [ August 2010 ]...

“There’s this bubble that’s growing that they helped create, and they themselves say ‘We can’t spot them’ so they’re not going to do anything” in time...

more...
http://noir.bloomberg.com/apps/news?pid=20601087&sid=aoven5VFPtYw&pos=4

___________________

The five-year rate is signaling inflation will remain benign over the long-term even as the gap between Treasury yields and five-year U.S. government debt tied to the consumer price index reaches the widest in almost two years.

The difference, known as the break-even rate, climbed to 2.31 percent on March 8, a day after oil reached a 29-month high of $106.95 a barrel on concern uprisings in North Africa and the Middle East will disrupt supply. The rate dropped to 2.20 percent on March 11 as crude fell after Japan’s strongest earthquake on record shut refineries in the world’s third- largest oil-consuming country.
http://noir.bloomberg.com/apps/news?pid=20601103&sid=av.k7Z0uDxKQ

USGGBE05:IND

http://www.bloomberg.com/apps/chart?h=200&w=280&range=1y&type=gp_line&cfg=BQuoteComp_10.xml&ticks=USGGBE05%3AIND&img=png​

http://noir.bloomberg.com/apps/quote?ticker=USGGBE05:IND
http://noir.bloomberg.com/apps/cbuilder?ticker1=USGGBE05:IND





TIPS

 

[trysail]

Shall we vote? The world is voting with its feet. The American peso isn't doing so well.

http://research.stlouisfed.org/fred2/graph/fredgraph.png?&chart_type=line&graph_id=30392&category_id=0&recession_bars=Off&width=1000&height=600&bgcolor=%23B3CDE7&graph_bgcolor=%23FFFFFF&txtcolor=%23000000&ts=8&preserve_ratio=false&fo=ve&id=DEXSZUS,DEXCAUS,DEXUSEU&transformation=lin,lin,lin&scale=Left,Left,Left&range=Max,Max,Max&cosd=1971-01-04,1971-01-04,1999-01-04&coed=2011-02-25,2011-02-25,2011-02-25&line_color=%230000FF,%23FF0000,%23006600&link_values=,,&mark_type=NONE,NONE,NONE&mw=4,4,4&line_style=Solid,Solid,Solid&lw=3,3,3&vintage_date=2011-03-03,2011-03-03,2011-03-03&revision_date=2011-03-03,2011-03-03,2011-03-03&mma=0,0,0&nd=,,&ost=,,&oet=,,&fml=a,a,1%2Fa&fq=Daily,Daily,Daily&fam=avg,avg,avg&fgst=lin,lin,lin​

 

[Aviator1976]

Why are you so focused on gas prices?

Maybe because you know that the price of gas is largely independent of the economic policies of the person in the White House. We have paid high and low prices under both conservatives and liberals.

So prices are lower than they were at their ridiculously high peak a year ago? Forgive me if I don't take much comfort in that stat.

I do not want the economy to be stagnant, but the reality is we have a long road ahead of us.

Oh but he specified since January 20th, conveniently ignoring the prices we were all paying at the same time last year. Context is the enemy..

 

[JustaSCOUNDREL]

Last year 3/3/10 the price from the refinery was about $2.15 today it is $2.82. That is about a 31.6% increase.

As I remember Trysail has a rather extensive back ground in the petroleum industry. Thus he should most likely have a hell of a lot more expertise in that area then anyone else on this board.

I will also note there is on hell of a lot in the price of food which is exempt from the cost of living as well as petroleum as they are both too volatile.

 

[trysail]

Do you honestly think a country can do this sort of thing with no consequences?

http://research.stlouisfed.org/fred2/graph/fredgraph.png?&chart_type=line&graph_id=31469&category_id=0&recession_bars=On&width=1000&height=600&bgcolor=%23B3CDE7&graph_bgcolor=%23FFFFFF&txtcolor=%23000000&ts=8&preserve_ratio=false&fo=ve&id=AMBSL&transformation=lin&scale=Left&range=Custom&cosd=1918-01-01&coed=2011-01-01&line_color=%23336600&link_values=&mark_type=NONE&mw=4&line_style=Solid&lw=3&vintage_date=2011-03-04&revision_date=2011-03-04&mma=0&nd=&ost=&oet=&fml=a&fq=Monthly&fam=avg&fgst=lin

(St. Louis) Adjusted Monetary Base: The sum of currency in circulation outside Federal Reserve Banks and the U.S. Treasury, deposits of depository financial institutions
at Federal Reserve Banks, and an adjustment for the effects of changes in statutory reserve requirements on the quantity of base money held by depositories. This series is a
spliced chain index; see Anderson and Rasche (1996a,b, 2001, 2003).

​

 

[trysail]

We're headed toward $3.75/gallon gasoline.

http://www.bloomberg.com/apps/chart?h=200&w=280&range=1y&type=gp_line&cfg=BQuoteComp_10.xml&ticks=CRK321M1%3AIND&img=png​

$102.75	Nymex Crude Future ($/bbl.)					
$2.45	Nymex Crude Future ($/gal.)         = [COLOR="Blue"][B]$3.68 @ Retail ($/gal.)[/B][/COLOR]	
$3.07	Nymex Heating Oil ($/gal.)					
$128.92	Nymex Heating Oil ($/bbl.)					
$3.04	Nymex RBOB Gasoline Future ($/gal.) = [COLOR="blue"][B]$3.67 @ Retail ($/gal.)[/B][/COLOR]	
$127.79	Nymex RBOB Gasoline Future ($/bbl.)					
						
    [B][COLOR="Blue"][SIZE="3"] Thus, 3-2-1 Crack Spread:						
	$25.42[/SIZE][/COLOR][/B]

Crack spreads are calculated as follows, Example: based on a 321 CL:HU:HO crack spread: (((XBA*2*.42)+(HOA*1*.42))-(CLA*3)))/3

Please note that all contracts follow the crude contract, so if the front month for CLA is October, the other components of the calulation should be based on October contracts as well. The HU contacts are being replaced with XB contracts starting from Feb 07. All calculations from Feb 07 on contain XB contract not HU. On CRKS page 2, the 12-month 3:2:1 crack strips are an arithmetic average of twelve cracks divided by 12. And, the other crack strips are averages of their respective 12-month strip ratios.

Note: these are Bloomberg calculated spreads which are to be used for price indication purposes only.

http://noir.bloomberg.com/apps/quote?ticker=CRK321M1:IND
http://noir.bloomberg.com/apps/cbuilder?ticker1=CRK321M1:IND

 

[Ulaven_Demorte]

We're headed toward $3.75/gallon gasoline.

http://noir.bloomberg.com/apps/chart?h=152&w=240&range=1y&type=gp_line&cfg=BQuote.xml&ticks=CRK321M1%3AIND​

$102.75	Nymex Crude Future ($/bbl.)					
$2.45	Nymex Crude Future ($/gal.)         = [COLOR="Blue"][B]$3.68 @ Retail ($/gal.)[/B][/COLOR]	
$3.07	Nymex Heating Oil ($/gal.)					
$128.92	Nymex Heating Oil ($/bbl.)					
$3.04	Nymex RBOB Gasoline Future ($/gal.) = [COLOR="blue"][B]$3.67 @ Retail ($/gal.)[/B][/COLOR]	
$127.79	Nymex RBOB Gasoline Future ($/bbl.)					
						
    [B][COLOR="Blue"][SIZE="3"] Thus, 3-2-1 Crack Spread:						
	$25.42[/SIZE][/COLOR][/B]

http://noir.bloomberg.com/apps/quote?ticker=CRK321M1:IND
http://noir.bloomberg.com/apps/cbuilder?ticker1=CRK321M1:IND

Yet it still looks like we may not surpass the ~$4 / gallon highs of 2008.
Not to mention that the current bump in price is due to a combination of the stress in the Middle East causing cuts in crude oil production and heavy heating season in the Northern US.

With any luck this may be the tipping point that spurs innovation in alternatives to fossil fuel dependency. If only someone had paid attention to Carter in th late 70's we may not be in the predicament we're in now.

 

[trysail]

Yet it still looks like we may not surpass the ~$4 / gallon highs of 2008.
Not to mention that the current bump in price is due to a combination of the stress in the Middle East causing cuts in crude oil production and heavy heating season in the Northern US.

With any luck this may be the tipping point that spurs innovation in alternatives to fossil fuel dependency. If only someone had paid attention to Carter in th late 70's we may not be in the predicament we're in now.

That's pretty amazing— during the most recent recession, U.S. petroleum consumption fell below the amount consumed 30 years ago, in 1978!

http://www.eia.gov/dnav/pet/hist_chart/MTTUPUS2a.jpg​

Date	U.S. Petroleum Consumption (Thousand Barrels per Day)
1973	17,308
1974	16,653
1975	16,322
1976	17,461
1977	18,431
1978	18,847
1979	18,513
1980	17,056
1981	16,058
1982	15,296
1983	15,231
1984	15,726
1985	15,726
1986	16,281
1987	16,665
1988	17,283
1989	17,325
1990	16,988
1991	16,714
1992	17,033
1993	17,237
1994	17,718
1995	17,725
1996	18,309
1997	18,620
1998	18,917
1999	19,519
2000	19,701
2001	19,649
2002	19,761
2003	20,034
2004	20,731
2005	20,802
2006	20,687
2007	20,680
2008	19,498
2009	18,771

Petroleum Consumption

 

[trysail]

The following was sent to me by e-mail:



U.S. may soon hit debt walls
by Scott S. Powell
The Philadelphia Inquirer
March 6, 2011

Nobody wants to say it, but a major reason corporations are not creating many jobs and expanding in the United States is the increasing systemic risk being created by Washington.

The United States is supposedly in economic recovery, yet President Obama projects a record $1.6 trillion deficit for 2011 — with years more trillion-dollar annual deficits and escalating debt ahead. Government debt is growing by $120 billion a month, three times faster than the $40 billion monthly increase in GDP. What is going on?

The real issue is not the U.S. government’s debt ceiling to accommodate ongoing deficit spending, but rather the wall that we are about to hit: foreign governments balking at financing U.S. debt except at significantly higher yields to offset the inflationary impact of the dollar’s declining value.

Recently, officials from China, Brazil, and other countries blamed high food and raw-materials prices on Washington — charging it with exporting inflation by degrading its currency through quantitative easing. No surprise here, as most commodities are traded in dollars. The Wall Street Journal notes that some economists blame dollar weakness induced by Fed policy for contributing as much as 50 percent of the price inflation in commodities such as corn, sugar, wheat, coffee, cotton, rubber, the metals, and oil.

This year Charles Plosser, the president of Philadelphia’s Federal Reserve Bank, has a vote on Ben Bernanke’s Federal Open Market Committee. In a recent interview, Plosser revealed he opposes his boss’ policy of quantitative easing, saying that “the costs outweighed the benefits” and that price stability has “got to be job one” at the Fed. There is, however, another issue for the Fed to worry about.

Another looming debt wall is the one from declining credit quality. An unsettling report, “Evolution of Moody’s Perspective on the U.S. Aaa Rating,” received little attention when released Jan. 27 in the midst of upheaval in the Middle East. But, coming on the heels of a similar warning from Standard & Poor’s, it has serious implications.

Moody’s states that “recent trends in and the outlook for government financial metrics in particular indicate that the level of risk, while still small, is rising and likely to continue to rise in the next several years.” It continues, “The time frame … appears to be shortening, and the probability of assigning a negative outlook in the coming two years is rising.”

Moody’s infers that accelerating government spending since the financial crisis of 2008-09 is the reason for shortening the time horizon for the negative credit watch revision. That debt is growing more than four times faster than revenue in the United States should be alarming by itself.

But the Moody’s report goes further, comparing the United States to other triple-A rated countries. It turns out that the United States is the outlier, with three times more growth in debt to revenue than the triple-A median, and more than twice that of Germany, France, the United Kingdom, and Canada, all of which have undertaken austerity measures. In addition, the combined federal and state debt in the United States is approaching the tipping point of 100 percent of GDP — considerably worse than any of the Triple-A-rated European social welfare states.

The U.S. government has enjoyed unlimited access to financing because of its role in having the reserve currency and being the safe haven in global financial markets. Thus, the U.S. Treasury bond has been the risk-free benchmark. But if the credit-rating outlook on U.S. sovereign debt turns negative, the dollar will risk losing its status as the world’s reserve currency because its associated government debt could no longer be considered risk free. Demand for dollars would decline precipitously and cause further devaluation.

The important take-away here is the imperative of reducing systemic risk by tying the debt ceiling to deficit reduction. Longer term, the debt ceiling should be capped at a percentage of GDP.

Without telegraphing the will to radically cut spending, the United States will hit a Greek wall of deficit finance and liquidity problems. If that becomes headline news it is already too late. History reminds us that such crises happen faster than most anticipate and almost always before the ratings agencies take action.
________________________________

Scott S. Powell is a visiting fellow at Stanford University’s Hoover Institution, a partner at RemingtonRand, and a former debt portfolio manager.

 

[RobDownSouth]

Good news for America...not so good news for gookfuckers

111 Stocks hit all-time highs yesterday

Frisco_Slug_Esq will be along shortly to jibber his jabber that it don't mean nothing unless there's a Republican president, not that he's a Republican, nossir, he's a goddamned independent, y'know, so that makes his commentary more MEANINGFUL than the rest of us partisan mortals.

 

[rosco rathbone]

111 Stocks hit all-time highs yesterday

Frisco_Slug_Esq will be along shortly to jibber his jabber that it don't mean nothing unless there's a Republican president, not that he's a Republican, nossir, he's a goddamned independent, y'know, so that makes his commentary more MEANINGFUL than the rest of us partisan mortals.

I'm rooting for the president, but marketwise waiting for the other shoe to drop.

 

[Frisco_Slug_Esq]

I'm rooting for the president, but marketwise waiting for the other shoe to drop.

It's a bubble.

In June the Fed stops pumping money in.

Throb's an idiot; he can't see the obvious inflation reflected in the numbers.

What else can be said?
__________________
You gonna shoot us another one of your hollow-point bullet proof facts?
Or are you just hateful, angry rhetoric?
One of Dem inspirational and motivational speakers?

Throb thread:
http://forum.literotica.com/showthread.php?t=745068

 

[rosco rathbone]

It's a bubble.

In June the Fed stops pumping money in.

Throb's an idiot; he can't see the obvious inflation reflected in the numbers.

What else can be said?

It's definitely a bubble: our economy is built on them and has been for a while.

 

[Frisco_Slug_Esq]

It's definitely a bubble: our economy is built on them and has been for a while.

Only stagnant managed economies don't have bubbles (outside of the black market).

These guys, hoping beyond hope that Keynesan measures are going to save the Democrat party and restore America crack me up, especially after Obama submitted a budget that Timmy Geitner admitted is unsustainable from the debt interest spiral.

Welcome to the new normal.



__________________
"As soon as we abandon our own reason, and are content to rely upon authority, there is no end to our troubles."
Bertrand Russell

 

[rosco rathbone]

Only stagnant managed economies don't have bubbles (outside of the black market).

These guys, hoping beyond hope that Keynesan measures are going to save the Democrat party and restore America crack me up, especially after Obama submitted a budget that Timmy Geitner admitted is unsustainable from the debt interest spiral.

Welcome to the new normal.



__________________
"As soon as we abandon our own reason, and are content to rely upon authority, there is no end to our troubles."
Bertrand Russell

Doom Loop they call it.

 

[Frisco_Slug_Esq]

Feels like gloom to me...

 

[RobDownSouth]

Good mornin', Gookfucker!

DERP DERP DERP bubble.
DERP DERP DERP the Fed DERP DERP DERP.
DERP DERP DERP Throb's an idiot; DERP DERP DERP inflation DERP DERP DERP
What else can be said?

You really CAN rationalize just about anything!

 

[Frisco_Slug_Esq]

Gook fucker?

How about some real good post-it material; you need some new lines.

Gonna blast that evil right-winger rosco too in the name of truth, justice, and the Democrat way?

__________________

I bitched about Bush for six years, and through all that time the Republicans on this board never trashed me the way the Democrats do now that "their guy" is "in charge."

They were angry when Bush was President, but they seem even more angry now that Obama is President.

Maybe it's just disappointment.

 

[Frisco_Slug_Esq]

If you're still into cherry-picking, there was an interesting article yesterday about currency traders shorting the dollar...






REALLY MAN?

Gook-fucker is the best you can come up with?

You do know Gook is a derogatory racist word on par with nigger, right?

 

[Frisco_Slug_Esq]

It is virtually impossible to pick up a newspaper without seeing Mark Zandi — or, as he is invariably identified, “Mark Zandi, a former adviser to John McCain” — extolling the virtues of government spending.

Zandi is worried that Republican plans to cut $61 billion in government spending this year — 1.7 percent of this year’s federal spending, 3.6 percent of this year’s deficit — will result in the loss of 700,000 jobs, and reduce economic growth by half a percentage point. This makes him a favorite among those who do not wish to see federal spending reduced.

But before we get too excited, let’s put Zandinomics in a bit of perspective.

First, we should dispose of the notion that Zandi is some sort of conservative Republican by virtue of his work for John McCain’s presidential campaign. It is true that Zandi was one of a number of economists from across the political spectrum whom McCain’s presidential team consulted for analysis of economic and business events, but he was never involved in formulating policy for the McCain campaign. In fact, Zandi is a registered Democrat, one who holds decidedly liberal political and economic views.

Second, Zandi’s record of forecasting is not unblemished. For example, in 2008 he was bullish about prospects for a recovery in the housing market. And he was one of the chief advocates of Obama’s stimulus plan, promising that it would create millions of jobs.

Zandi’s current prominence is based on an economic simulation he developed, allowing him to plug in government policies and report quotably precise estimates of how those policies will impact economic growth and job creation. But Zandi relies on an old-fashioned Keynesian economic model under which government spending creates a large “multiplier effect” that inevitably leads to growth.

Under this model, if government spends $1 billion to build a new bridge, the money doesn’t just disappear; it is used to pay wages to the bridge builders, buy steel, and so on. The bridge builders and steel suppliers in turn spend their income, raising consumption and creating demand as the money cycles through the economy.

If the multiplier equals one, then each unit increase in government purchasing leads to a unit increase in GDP, and government spending is essentially free. The government can build a bridge or invest in “green energy” without reducing anyone else’s consumption or investment: It’s a free lunch.

But Zandi goes even further. In his model, the multiplier is greater than one. This means that when government builds that bridge, not only does the bridge not really cost us anything, but building it generates additional resources that we can use to stimulate private consumption and investment: The free lunch includes a free dessert. In fact, the logic of Zandi’s model holds that government spending is such a good deal that it doesn’t matter if we needed the bridge in the first place; we should keep building it, tearing it down, and building it again, to multiply the money we are spending. From Zandi’s point of view, former Alaska senator Ted Stevens’s infamous “bridge to nowhere” wasn’t pork — it was a brilliant investment, and we should have built ten of them, or a hundred.

Of course, Zandi’s premise is simply a restatement of the ancient “broken-window fallacy,” an economic error refuted by the economist Frédéric Bastiat in 1850. In Bastiat’s parable, a shopkeeper’s careless son breaks a pane of glass in his father’s store. According to the economic theory popular at the time, that was actually a good thing, because it meant that the shopkeeper would have to pay the glazier to repair the window. The glazier then would use his new income to buy a pair of shoes, and the shoemaker would spend the money, etc. The cycle continues, and the economy is stimulated. As Bastiat notes, “You come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it.”

But as Bastiat pointed out, that leaves out an important calculation: what the shopkeeper would have done with the money had he not been obliged to buy a new window. “It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another,” Bastiat wrote. “It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.” The accident only means that the shopkeeper has spent six francs to bring himself back to the economic state he was in before the window was broken; he is no richer for it, but six francs poorer.

Zandi ignores the way in which government spending, taxes, and borrowing squeeze out private consumption and investment — what we might have done with the money had it not been taken by the government to build bridges to nowhere. And he ignores the need for economies to create new wealth rather than to simply redistribute existing wealth.

http://www.nationalreview.com/articles/print/261636

 

[Frisco_Slug_Esq]

Oil prices surged to near $107 per barrel yesterday and regular gasoline is going for $3.51 per gallon. Last March oil sold for around $80 per barrel and gas cost about $2.79 per gallon. The uprisings throughout the Middle East are in part responsible for the recent uptick in prices. For example, the fighting in Libya has reduced global oil production by about one million barrels per day. On the other hand, members of the Organization of Petroleum Exporting Countries (OPEC) are boosting their output by a similar amount to make up for the shortfall. Democrats in Congress are calling upon President Barack Obama to damp down prices by selling off oil from the Strategic Petroleum Reserve.

Of course, the global oil market is pricing in worries that production could be disrupted if protesters in other major OPEC producers such as Saudi Arabia, Kuwait, and Iran began to demand greater freedom. What would happen to the U.S. economy if petroleum prices continue their rapid rise? University of California, San Diego, economist James Hamilton noted in a recent study that 10 out of 11 post-World War II recessions [PDF] in the United States were preceded by a sharp increase in the price of crude petroleum. The only exception was the mild recession of 1960-61 for which there was no preceding rise in oil prices.

Hamilton has also written a fascinating short history [PDF] of U.S. and global oil price shocks. Until 1974 the United States was both the world’s biggest consumer and producer of crude oil. Although domestic oil production has recently upticked, the U.S. today produces about half the oil it did in 1971. It still is the biggest consumer.

It turns out that boom/bust price shocks have been a feature of oil production ever since Edwin Drake drilled his first well in Pennsylvania in 1859. Before Drake’s well crude oil was being sold for the equivalent of $2,000 per barrel (2009 dollars). After Drake’s discovery, the price of oil collapsed by 1861 to about $2.50 per barrel. In those days, the products of crude oil chiefly competed against ethanol as illuminants. Oil became increasingly important to the U.S. economy as it took over as the chief transport fuel. In 1900, there were 0.1 internal combustion-engine vehicles per 1,000 residents, rising to 87 by 1920, and reaching 816 in 2008.

Between 1915 and 1920 oil consumption in the U.S. nearly doubled. A gasoline “famine” broke out in 1920 on the West Coast, provoking state governments to issue ration cards and prosecute “joyriders.” The famine preceded the recession that began in January 1920. The giant oil fields in Texas, California, and Oklahoma came online and oil prices fell 40 percent between 1920 and 1926. By 1931, oil prices had fallen an additional 66 percent. To prevent overproduction, states began to set pumping quotas and Depression-era federal legislation prohibited interstate shipments of oil produced in violation of state regulatory limits. These restrictions did prevent waste, but also boosted prices for producers.

The price shocks after the World War II were generally associated with geopolitical events that significantly disrupted global production. For example, Iran nationalized oil production in 1951 and during the Korean War the U.S. Office of Price Stabilization froze oil prices. In 1956 war broke out when Egypt nationalized the Suez Canal, disrupting oil imports. The biggest geopolitical event for oil prices was the 1973 OPEC oil embargo, which was imposed to punish countries that had supported Israel after it had been attacked by Egypt and Syria. The price of oil doubled. In 1979, the Iranian Revolution resulted in supply disruptions that were then made even worse by the outbreak of the Iran/Iraq War in 1980. Still, in the 1980s, global oil prices collapsed to $12 per barrel.

The next run up in price was associated with Iraq’s invasion of Kuwait and the First Persian Gulf War in 1990. While oil prices slowly rose through most of the 1990s, the U.S. and global economy both continued to expand. The 1997 East Asian Financial Crisis led to another collapse during which oil prices once again fell to $12 per barrel by the end of 1998. “A price that perhaps never will be seen again,” writes Hamilton. After 2001, Hamilton argues that oil production did not keep up with global economic growth. The result was that the price of oil eventually reached its highest level in modern history, about $142 per barrel in the summer of 2008. Interestingly, the U.S. economy entered what would become the Great Recession in December 2007. By December 2008, the price of oil had dropped to just over $30 per barrel.

Hamilton is not arguing that oil price shocks are the sole cause of recessions, but that they tip an already vulnerable economy into contraction. A 2010 study by economists at the St. Louis Federal Reserve Bank agrees: “For most countries, oil shocks do affect the likelihood of entering a recession. In particular, an average-sized shock to WTI [West Texas Intermediate crude] oil prices increases the probability of recession in the U.S. by nearly 50 percentage points after one year and nearly 90 percentage points after two years.” On the other hand, a 2005 study by the Stanford Energy Modeling Forum found that “when oil prices move gradually higher (perhaps somewhat erratically), as they have done over the last several years, they do not directly result in economic recessions, even though the economy may grow modestly slower.” Gradual price increases do not derail economic growth because consumers and entrepreneurs are able to adjust smoothly to them.

So how do oil shocks cause recessions?

http://reason.com/archives/2011/03/08/oil-price-shocks-and-the-reces

 

[RobDownSouth]

The gookfucker is befuddled...

If you're still into cherry-picking, there was an interesting article yesterday about currency traders shorting the dollar...




REALLY MAN?

Gook-fucker is the best you can come up with?

You do know Gook is a derogatory racist word on par with nigger, right?

I suppose it had to come to this eventually: you don't even bother to cut-n-paste anymore. Meta-commentary! "I saw this one article and...."

 

[trysail]

http://noir.bloomberg.com/apps/news?pid=20601085&sid=aMo2qlWej.HY


[ emphasis supplied ]
Dollar Depressed by OPEC Slashing Treasury Holdings by 9%
By Allison Bennett

March 14 (Bloomberg) -- Oil-exporting countries are cutting holdings of U.S. government debt as energy prices rise, helping depress the dollar, the worst-performing major currency of the past six months.

Treasuries owned by oil producers and institutions such as U.K. banks that are proxies for Middle East nations fell 9 percent in the second half of 2010 to $654.6 billion, the first decline in the final six months of a year since the Treasury Department began compiling the data in 2006. The sales may continue, if history is any guide, because Barclays Plc says Middle East petroleum exporting nations have traditionally placed only 25 percent of their savings in dollar-based assets.

“Middle Eastern oil exporters are now getting this extra windfall of dollars and the question is on the margin what they want to do with that,” said Jeffrey Young, the head of North American foreign-exchange research at Barclays in New York. “It’s dollar negative” unless political risks around the world increase and spur demand for the safety of U.S. assets, he said.

The appeal of the dollar has diminished as the Federal Reserve keeps interest rates at almost zero, prints cash to purchase $600 billion of bonds in a policy known as quantitative easing and the budget deficit holds above $1 trillion. The currency fell to 61.3 percent of global foreign-exchange reserves in the third quarter, from a peak of 72.7 percent in 2001, the latest International Monetary Fund data show.

Dollar Depreciation
Bloomberg Correlated-Weighted Indexes show the currency has fallen 2 percent since Feb. 15, bringing its slide against a group of nine developed-nation peers including the euro, yen and franc to 5.94 percent since September, when crude began its climb from $71.67 a barrel to a 29-month high of $106.95 reached on March 7.

While it strengthened 0.6 percent last week to $1.3903 per euro, the greenback is down from last year’s peak of $1.1877 in June. The dollar touched 80.62 per yen today in Tokyo, the weakest since Nov. 9. Oil for April delivery fell 3.1 percent last week to $101.16 a barrel on the New York Mercantile Exchange, after rising more than 20 percent in the past year.

“When you have a shift of global wealth to OPEC producers, that group tends to hold more euros in reserves and they also tend to purchase imports more from Europe than the U.S.,” said Greg Anderson, a currency strategist at Citigroup Inc. in New York. “Crude oil above $100 is an almost an across-the-board negative for the dollar.”

Biggest Gains
The 12 members of the Organization of Petroleum Exporting Countries -- Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela -- provide about 40 percent of the world’s oil. While it’s almost impossible to trace the flow of their dollar revenues from crude sales, the biggest gaining major currencies over the past six months based on Bloomberg Correlation-Weighted Indexes are Sweden’s krona, Norway’s krone, the euro, franc and Australia’s dollar, all rising more than 2 percent.

Europe’s common currency has appreciated 2.4 percent since Feb. 15 as rising energy costs push inflation above the European Central Bank’s target, increasing the likelihood that policy makers will boost their benchmark interest rate from a record low 1 percent as soon as next month. The Federal Reserve has kept its target rate for overnight loans between banks at zero to 0.25 percent since December 2008.

International investors, who own about half of the marketable U.S. government debt outstanding, are key to the ability of the U.S. to finance cumulative budget deficits that President Barack Obama’s administration forecasts will total $4.77 trillion from 2011 through 2015.

Broad Buying
The drop in Treasury holdings by oil producers in the final six months of 2010 contrasts with an 11 percent jump to $4.44 trillion for all foreign holders of U.S. debt.

America’s currency rallied last week as reports from China, Australia and Germany damped the outlook for the global economic recovery. Economists at London-based Barclays Capital forecast in a March 11 report that growth worldwide will total 4.3 percent this year, down from 4.8 percent in 2010.

“When crude oil started to rise a couple of weeks ago, there was talk of the dollar having lost its safe-haven status, but the reality was we weren’t really in safe-haven mode until the last couple of days,” said Derek Halpenny, European head of currency research at Bank of Tokyo-Mitsubishi UFJ in London. “As we move through the year, the current pessimism in regards to the U.S. dollar will change as the labor market visibly improves and quantitative easing comes to an end.”

Currency Forecasts
The euro may fall to $1.30 by year-end, Halpenny said. The median estimate of 44 strategists and economist surveyed by Bloomberg is for the currency to weaken to $1.35. Japan’s yen may depreciate to 88 per dollar, a separate poll shows.

“There is relatively persistent global demand for dollars even with a structural trend of it slightly declining over time as a percentage of overall asset holdings,” said Jens Nordvig, a managing director of currency research in New York at Nomura Holdings Inc. “That will be true for Middle Eastern central banks as well as the alternative, the euro, is not looking like a clear winner because of fundamental reasons.”

Greece had to seek a bailout after its debt reached 127 percent of gross domestic product in 2009. Ireland was next as the economy was devastated by the collapse of a decade-long real-estate boom and the demise of its financial system, which prompted the government to take over some of the nation’s biggest banks.

Foreign Holdings
Europe’s common currency advanced versus the dollar today, trading at $1.3959 as of 10:25 a.m. in London, after the region’s leaders negotiated an accord to allow their rescue fund to spend its full 440 billion-euro ($611 billion) capacity, removing restrictions that would have capped outlays at about 250 billion euros.

As the dollar’s share of global reserves has fallen, the IMF’s report shows that holdings categorized as “other,” which excludes dollars, euros, British pounds, yen and francs, rose to 4 percent of the total, the highest on record.

Foreign holdings of dollar-denominated assets by Middle East oil exporters, Norway and Russia fell to $657 billion as of June 2010, or 6.1 percent of the total $10.7 trillion, according to Treasury data. That compares with 7.2 percent in 2008.

In November, Alexei Ulyukayev, first deputy chairman of Russia’s central bank, said it had begun to purchase Canadian dollars to diversify away from U.S. dollars and euros. Russia’s reserves were made up of 47 percent dollars, 41 percent euros, 10 percent pounds and 2 percent yen.

Correlation Breakdown
Net purchases of U.S. financial assets slowed to $121.6 billion in the final three months of the year from $263 billion in the third quarter, according to the Federal Reserve’s Flow of Funds report released March 10. Global official net purchases of Treasuries, which best reflect central bank actions, dropped to the lowest on record in December, for an outflow of $45 billion.

That may be because emerging Asian economies, which are net importers of oil and among the biggest buyers of U.S. debt, spend more on energy, according to Barclays. Those nations, including China and India, hold an average 62 percent of their surpluses in U.S. securities, according to the Treasury Department.

The breakdown in the correlation between oil and U.S. Treasury yields, which has turned negative for the first time since 2008, may also be working against the dollar.

The 120-day correlation fell to negative 0.01 on March 1 from a record high of 0.544 in July. A reading of 1 would mean the two move in lockstep. The figure has averaged 0.32 since September 2008, when Lehman Brothers Holdings Inc. collapsed and caused the biggest financial crisis since the Great Depression.

Rising Energy Prices
Rising energy prices are typically a function of faster economic growth, which tends to hurt bond prices and boost yields as investors switch into riskier assets. Lower short-term yields diminish the appeal of dollar-based fixed-income assets to investors outside the U.S. Two-year note yields have dropped to as low as 0.64 percent from 0.88 percent in mid-February.

“Yields remain stable and oil prices moved higher and if that trend is sustained you could see further dollar weakness,” said Paresh Upadhyaya, head of Americas Group-of-10 currency strategy at Bank of America in New York.

 

[Frisco_Slug_Esq]

Friedrich Hayek's A Tiger by the Tail: The Keynesian Legacy of Inflation was published in 1978. It seems an appropriate description of what Quantitative Easing (QE) has produced. We are far along on a journey that cannot be stopped without enormous damage.

Quantitative Easing is a euphemism for money creation. Money creation is, by definition, inflation. Eventually inflation produces higher commodity and other prices. Inflation can be created by other Fed policies besides QE. However, for purposes of this article, QE will be dealt with as if it is the primary cause (which it has been recently).

According to Chairman of the Federal Reserve Ben Bernanke, we are in phase 2 (QE2) of "money printing." Those knowledgeable of history find this characterization amusing, because the Fed has engaged in almost continuous money creation from its founding in 1913. Since then, 96% of the dollar's purchasing power has disappeared with much of the loss occurring subsequent to the mid-1970s.

Mr. Bernanke initiated his so-called QE2 ostensibly to improve traction for the weak economic recovery. According to Bernanke, the program will end in June. With regard to his promise, Mr. Bernanke resembles Charlie Brown's friend Lucy placing a football.

QE will end but not in June, at least not permanently. It will not end as a result of political decision or Fed mandate. It will fall victim to Stein's Law: "if something cannot go on forever, it will stop."

Why Quantitative Easing?

Money creation is never proper economic policy. It does not improve or create wealth. Its purpose is to fool citizens. As such, it is a fraud employed by governments to deceive and steal. If high enough, QE results in societal disruption. At worst, it produces hyperinflation, violence and government overthrow. History offers numerous examples.

The famed economist John Maynard Keynes did not invent inflation, but he was instrumental in making it seem acceptable as economic policy. In his General Theory, he advocated solving unemployment problems by "fooling" workers with higher nominal wages. He assumed workers were too obtuse to differentiate between nominal and real wages.

Keynes also was aware of the more devastating aspects of inflation:

The best way to destroy the capitalist system is to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.

He probably was not advocating the destruction of capitalism, although his economic system and his elitism were not inconsistent with such an outcome.

What is Wrong With QE?

Inflation, as a policy, is a politician's dream. As Friedrich Hayek noted:

... moderate inflation is generally pleasant while it proceeds, whereas deflation is immediately and acutely painful.

Given the short-term orientation and desire to please, inflation is an easy political choice. From an economic standpoint, however, inflation is always harmful. Keynes' ideological opponents understood the short-term benefits, but knew inflation's dangers. Ludwig von Mises stated:

Credit expansion can bring about a temporary boom. But such a fictitious prosperity must end in a general depression of trade, a slump.

In a swipe at Keynes notorious short-term focus, Mises stated:

In the long run we are all dead. But unfortunately nearly all of us outlive the short run. We are destined to spend decades paying for the easy money orgy of a few years.

The absurdity that money creation can produce economic benefits was illustrated in this Mises' observation:

If it were really possible to substitute credit expansion (cheap money) for the accumulation of capital goods by saving, there would not be any poverty in the world.

All economists recognize that cessation of a monetary expansion will contract the economy. Regardless of how beneficial a cessation might be, it is politically untenable to be seen deliberately engineering such an outcome. That is why QE will not end as a result of conventional political means.

Why QE is Unsustainable

Economic stimulus via monetary expansion has a limited life because inflation, in order to provide stimulus, must continuously accelerate. As described by Milton Friedman:

Inflation is like a drug. Its stimulating effect is temporary. Only larger and larger doses can sustain the stimulus, before the chaos of hyperinflation removes all the gains.

Friedman's "larger and larger doses" are necessary, but not sufficient. These increases must also "fool" or thwart the expectations of economic decision makers. As Hayek expressed it:

Inflation thus can never be more than a temporary fillip, and even this beneficial effect can last only as long as somebody continues to be cheated and the expectation of some people unnecessarily disappointed. Its stimulus is due to the errors which it produces. It is particularly dangerous because the harmful after-effects of even small doses of inflation can be staved off only by larger doses of inflation.

When it becomes apparent what is happening, people anticipate future government action and act to protect themselves. Once enough people understand the game, the charade ends either as a deep recession/depression (cessation of inflation) or a hyperinflation. The latter occurs when people spend money as quickly as they receive it in order to avoid the loss of purchasing power. In effect, money ceases to be used and society deteriorates to a barter economy.

Why QE Will Continue Until Hyperinflation Stops It

From a purely economic perspective, QE and inflation should never have occurred. From a political standpoint, it is a means of hiding the critical economic condition of the country. A stoppage of the program would result in two likely outcomes:

1. A Depression
Economic and financial performance has been artificially inflated by QE. A bubble in both areas has developed as a result of QE. Chris Martenson explains:

The Fed has been dumping roughly $4 billion of thin-air money into the US markets each trading day since November 2010. The markets, all of them, are higher than they would be without this money. $4 billion per trading day is an enormous amount of money. As soon as the QE program ends, the markets will have to subsist on a lot less money and liquidity, and the result is almost perfectly predictable.

From the standpoint of economic stimulus, many analysts believe that QE has run its course or even failed. Edward Harrison states:

QE2 has only been successful insofar as it has increased business credit and raised asset prices. In my view, QE2 has been a bust as it adds volatility to the system and will have negative unintended consequences down the line.

If QE no longer provides economic stimulus, then why continue it? Quite simply, stopping QE would potentially cause markets to collapse and the economy to enter a depression. Stopping it also would risk bankrupting the Federal government.

2. A Government Unable to Pay its Bills
The Federal government is insolvent. Without QE it would likely be illiquid. It is doubtful the US could sell enough debt to arms-length buyers to sustain its current spending. The current estimate of the deficit is $1.7 Trillion.

Without QE there would be added distress for government and the economy. Domestic interest rates would rise to whatever level necessary to attract market funding. Higher interest rates would provide a further drag on the economy. They would also dramatically widen government deficits. Kyle Bass quantifies what a return to more normal interest rates would do to government spending:

... a move back to 5% short rates will increase annual US interest expense by almost $700 billion annually against current US government revenues of $2.228 trillion (CBO FY 2011 forecast).

Added on top of current spending, this cost would increase the deficit to $2.4 Trillion, more than projected revenue collections this year. The government would then be spending more than 200% of what it collected.

Traditional Treasury investors (foreign individuals, other sovereigns and US investors) are likely unwilling to buy the amount of debt necessary to support US deficits. The biggest non-government buyer of Treasuries, Pimco, the world's largest bond fund, has eliminated Treasuries from its holdings as reported by Zerohedge:

Based on still to be publicly reported data by Pimco's flagship Total Return Fund, the world's largest bond fund, in the month of January, has taken its bond holdings to zero.

In June 2010 Pimco held a record $147.4 billion of US government securities. Since then, these holdings have dropped to zero. Pimco now holds record cash balances.

Serious concerns over continued US profligacy have been expressed by foreign lenders. China, Japan, Britain and other sovereign nations have neither the ability nor the inclination to continue to support our sovereign version of Blanche du Bois's depend-upon-the kindness-of-strangers. Their economic conditions are at least as dire as ours and as much in need of funding.

Money invested in US Treasuries by foreign sovereigns has produced losses. A report issued by the Bank of International Settlements (BIS) in 2008, observed and warned:

Foreign investors in U.S. dollar assets have seen big losses measured in dollars, and still bigger ones measured in their own currency. While unlikely, indeed highly improbable for public sector investors, a sudden rush for the exits cannot be ruled out completely.

The dollar has depreciated since the BIS warning, further increasing losses to foreign investors.

Is There a Way Out?

The fraud that the US government has become over the past several decades is now apparent. Our economy has been hollowed out as a result of "bubble economics." Consider just some of these facts:

Many citizens have filed bankrupted as a result of the financial and housing bubbles.
Housing prices are expected to fall another 10 - 20%.
Retirements have been deferred and many will never happen.
Capital has gone overseas to be treated better with respect to taxes and regulations.
Jobs have left with the capital.
Unemployment is near all-time highs if measured correctly and many economists believe it will remain extraordinarily high for a decade or more.
The social welfare network is under irreparable pressure and will be recognized as bankrupt within the next few years.

In short, our economy is in a shambles despite what the propaganda machine spews. Harry Schultz, famed investment advisor and newsletter author, wrote at the age of 86 in his final newsletter:

Roughly speaking, the mess we are in is the worst since the 17th century financial collapse. Comparisons with the 1930's are ludicrous. We have gone far beyond that. And, alas, the courage & political will to recognize the mess & act wisely to reverse gears, is absent in the U.S. leadership, where the problems were hatched & where the rot is by far the deepest.

Mr. Schultz has seen a lot in his lifetime. His description, unfortunately, is correct. We are on the brink of a massive collapse -- economically and politically. There are only two choices left for our political class. They were laid out by Ludwig von Mises long ago:

There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved.

Their choice seems obvious. QE will continue until total catastrophe occurs in the form of a hyperinflationary depression. Politicians will then point fingers at everyone but the real culprits - themselves. In the enlightened era of alternative news, their strategy probably cannot work.

If I were a politician, I would resign immediately and head for safety before it becomes apparent to the masses what is going to happen.

A parting caution: While I expect QE to run until a hyperinflationary collapse ends it, an announcement that it has been terminated could cause a severe collapse in financial markets. Be aware of the possibility of this "Lucy football strategy" by a desperate and reeling Ben Bernanke. Expect QE to be reinstated quickly once some pain is felt.

Monty Pelerin

 

[unregistered]