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Enterprise Products Partners L.P. Message Board

  • bigmoneymine bigmoneymine Aug 9, 2011 11:47 PM Flag

    What Happened Today (Aug-9)

    This market is crying, "Feed me, Seymour!" It needs more liquidity to stay big and strong but there isn't any. So poor Benny slits his wrists and makes one last offering to the insatiable gods-of-greed -- to keep interest rates at zero for the next couple of years. OK, so what?

    I mean, were there a bunch of people running around recently saying that interest rates were going up? I was under the impression that near-zero interest rates were pretty much locked in for quite a while. So what's with the big announcement today?

    I'll tell you what it was, a last ditch effort to prop up a dying market. Apparently some analysts out there believe near-zero interest rates will force people into stocks, especially dividend-paying stocks. Fine, but hasn't that been the case for some time now. Oh, right, I'm going out to by dividend stocks first thing tomorrow morning after a 635 pt free-fall on Monday and a 400 pt pseudo-rally today -- a rally that would never have happened had Bernanke not tossed the market some more feel-good sugar pills. It was a placebo, not a cure.

    This is a clear case of Government manipulation, trying to keep the markets solvent through the election cycle. But it won't work, the Fed is powerless. Their only "tool" is QE3: something a lot of experts, like Mark Faber, seem to think is all but a done deal. QE3 will be just as big a disaster as was QE1 and QE2. Most of that money is STILL sitting in banks as security against their mortgage portfolios or other investments.

    Today's action was a combination of short-covering and programmed trading. This may continue through the end of the week, but I'm not buying into this Government-sponsored charade until I see signs of real sustained technical support. Even then, my investment horizon will be measured in days rather than years as before.

    Here's some additional commentary:

    "But there’s only so long that Bernanke can string markets along. It won’t take investors long to realise that his new treatment – keeping short-term interest rates extremely low until mid-2013 – is little more than a placebo."
    http://www.businessspectator.com.au/bs.nsf/Article/US-Federal-Reserve-Ben-Bernanke-interest-rates-QE3-pd20110810-KKU4Z?OpenDocument&src=sph

    Bloomberg article quoting a Fed expert: “The Fed can’t do much because it’s already done too much. It’s pretty much impotent.” “We have one and a half trillion in idle reserves in the banking system, and interest rates are the lowest levels ever. QE2 was a foolish move and adds to the inflationary pressures we’re going to see after time.”
    http://www.bloomberg.com/news/2011-08-09/meltzer-o-sullivan-say-dissents-highlight-divisions-on-fomc.html

 
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