CNBC's Steve Liesman explains what QE is and what it can and cannot do for the economy with James Bullard, St. Louis Federal Reserve Bank CEO/president.
This morning we confirmed that thousands more jobs were lost in Canada and the US in September. Unfortunately most financial commentators/advisors don't seem to worry their empty little heads about real life losses. Instead we get Perma-bull nonsense about bad news being good because more job losses will force governments to ramp up rescue efforts again. Well they might; but throwing good money after bad is destined to make as little difference a second time as it did the first.
Meanwhile those that actually care about the risks in our system are becoming increasingly concerned as waves of alarming data point to more crisis looming. Chief rates strategist and economist at TD Securities, Eric Lascelles issued a rare sober assessment of recent trends in TD's Market Musings this week which can be summarized as follows:
Sovereign states the world over are sending sickly and increasingly desperate signals.
Given their tendency to sugar-coat and their informational advantage, if sovereigns are worried, it is time for the rest of us to be very concerned.
Some recent actions taken by central banks are constructive, but others will be ultimately quite destructive.
The deleterious actions show just how panicked sovereigns are, and will hurt the global recovery.
In turn, volatility protection appears cheap; it seems premature to short government bonds; the exchange rates of emerging and commodity nations could be squeezed higher; and equity/commodity markets may celebrate for now, but they should turn their focus away from the hopeful consequences of QE, and towards the grim underlying motivations for it.
You can Read the entire article here.
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If the goal of QEII would be to try to inflate the economy out of its rut by pumping up the prices of gold, oil, commodities, and stocks, and holding up the price of bonds, so far the Fed’s ‘big tease’ is working just as well, without the Fed having spent a dime.
Which brings up another question. With Fed action already factored into prices is it going to be a case of ‘buy the rumor, sell the fact’ if action is taken?