this rings true for me, intuitively i of course know it to be true, to say nothing of the "facts".
Even if the banks are making a percentage of profit off these swaps, it has to be more than the $10.5 billion in interest they have given up in selling their bonds for it to be a net increase in profit for them.
I agree with your second question. There is no reason at all to do them. The Fed was tapped out at near-zero interest rates, and simply tried this last gasp measure in response to the negative economic data last summer in the hopes they could get something going, probably by influencing investor perception. It was stupid and it was unnecessary.
Yes, I grant that wholeheartedly. QE2 has failed to achieve any of its stated goals which was lower mortgage rates and lower interest rates on long-term (7 year) treasuries and borrowing has continued to descend. At best, it has had an indirect effect on stock prices. It should have never been done, and there is nothing the FED can do for the economy but keep the interest rate near zero and get out of the way. Only an expansionary government fiscal policy can get us out of this slump.
Wrong each one of these POMOs has a % of profit being made by the banks in te process of rolling in and out, sometimes in a matter of weeks. Also if QE2 has no negative effects and the positives are only speculation because of a percieved put, than why do them? GL!!
What I am saying is that banks could have done whatever they are doing just as much before QE2 as they could afterwards. The banks have no more chips now then they did before QE2. They could have cashed in their bonds whenever they wanted for cash in the extremely liquid treasury market or they could have used them as collateral for secured loans. If they wanted to bid up assets before QE2 they could, and if they wished to do it afterwards they could. QE2 simply swapped bonds for reserves, nothing more, producing no direct changes on anything. It was the psychological effects of QE2 that were the problem, not the actual effects.
I think what Deb and myself are stating is that QE2 is being sold as an economic stimulus when in fact it is nothing more than a bank balance sheet repair scheme that is being used to move money from the masses to the banks in different variables. It sure aint creating jobs or repairing an imbalanced housing sector. GL!!
In simple terms you are stating that a drug dealer(Ben-QE2), should not be blamed if the drugs given by him to the drug addict(banks) is consumed and used in a negative way. That is asinine! He knows full well, that giving the gamblers a free stack of chips, mean they are going to find a table, and one of those tables is commod futes. He is protecting himself by saying i have no control of which vein the addict will use. Geeeez! GL!!
Debrea, please look closely at the first chart he posted. There is perfect correlation between world demand and commodity prices. Since that world demand is coming from outside the U.S.A., the rest of his argument is complete nonsense.
american bankers are stashing free cash in commods, less in "some" stocks. mrkt is thinly held and only by a few.
they can at any time drive stock mrkt any dierection they like at their liesure. it's obvious to you "they" aren't spending our hard earned tax free $$ on the wellbeing of american citizens, i hope. not a dime hit the street unless you're a runner for ben and/or lloyd and the boys.
I don't see anything factual about the article. Of course, U.S. producer prices would go up if the demand in emerging economies were causing commodities prices to surge. I have no clue how he can say the Fed is responsible, when outstanding loans have been declining in spite of the large spike in reserves from QE2 which I charted here: http://research.stlouisfed.org/fred2/graph/fredgraph.png?&chart_type=line&graph_id=38938&category_id=0&recession_bars=On&width=630&height=378&bgcolor=%23B3CDE7&graph_bgcolor=%23FFFFFF&txtcolor=%23000000&ts=8&preserve_ratio=false&fo=ve&id=BASE,LOANS&transformation=lin,lin&scale=Left,Right&range=Custom,Custom&cosd=2005-01-01,2005-01-01&coed=2011-03-23,2011-02-01&line_color=%230000FF,%23FF0000&link_values=,&mark_type=NONE,NONE&mw=4,4&line_style=Solid,Solid&lw=1,1&vintage_date=2011-03-25,2011-03-25&revision_date=2011-03-25,2011-03-25&mma=0,0&nd=,&ost=,&oet=,&fml=a,a&fq=Bi-Weekly%2C%20Ending%20Wednesday,Monthly&fam=avg,avg&fgst=lin,lin
The U.S. money supply has been in decline for over a year: http://www.shadowstats.com/alternate_data/money-supply-charts
His argument therefore is baseless, and he mainly knocked down a strawman. No one claimed that U.S. demand was causing the inflation in commodities. All one has to do is look at the emerging economies to see where the demand in oil and other commodities is coming from: http://seekingalpha.com/article/252124-enough-with-the-bernanke-bashing-instead-look-at-m2-in-china
w2hich is what the "pd's" are spending the $ on, not all are from america as you know.
commodities and stocks, which is why some street person is sleeping in my truck as we speak. i think i'm getting how this works, slowly to be sure.
these are interesting developments as well. take notice who the players are blackrock of course, right in there baby, same w/ lloyd's crew, actually it's all the ole crew deciding "perhaps we hosed em enough, lets flush em the other dierection for awhile
get ready for a r.e. bounce 12 months,deflated dxy,continued commodity
inflation AFTER bounce in the dxy!!
and i though i was dumb, this shytes eazze!!