Tanked? Have you looked at the job #s in granular detail? The seasonal unadjusted is up something like +700k (which is what the birth/death adjustment comes up with). Furthermore, I don't think pulling back from additional QE had much of anything to do with the recent slowdown. The disaster in Japan (and the connected supply chain disruptions) had a much more substantial effect in real terms. This is a minor 'correction' to a jobless recovery. If you want more jobs, you'll need fiscal (and monetary) stimulus for that. Just ask China: that's what they do. Where we are at with so many stabilizers is probably already our steady state employment (thus the lack of recovery) level until at least we either successfully inflate (housing) or pay off the associated debts (a decade+). Until then, banks have relatively little money or desire to lend, marginally strapped US consumers have no interest in spending (since they aren't moving anywhere), and deflation reigns supreme. And thats with a few trillion more of QE... The economy isn't growing, but it isn't crashing either. It's stable.
Here comes QE3 or OT2 (Operation Twist 2) http://www.zerohedge.com/article/bill-gross-warning-operation-twist-coming-2-year http://en.wikipedia.org/wiki/History_of_Federal_Open_Market_Committee_actions#Operation_Twist http://www.cnbc.com/id/43321722/Operation_Twist_Coming_Instead_of_More_Easing_Economist http://globaleconomicanalysis.blogspot.com/2011/06/beyond-point-of-no-return-operation.html
They're huge! US owe them alot of money, which will worth so little after QE ...(n) Therefore China will seize .... Africa...
The 3% refers to the 10 year UST Note yield, I think the other ET poster meant. i.e. enabling the banking system to slowly re-capitalize borrowing short, lending long, though I'm pretty sure you knew that? Usually I can understand where you're coming from... Also a little surprised you're not expecting QE3. I get the feeling that most of the market tends to feel QE3 is inevitable after recent job data. If Bernanke stops at QE2 surely he'd only be saying to himself, "if I only I stuck to my guns, just so I knew either way whether my new age economic theories really worked". I get the feeling Bernanke is in his own bubble, creating a new one for the rest of us. Or is the dollar dumping bald eagle really having second thoughts?
QE3 (or a variation thereof) is a matter of when, not if. I find it incredibly hard to believe that if the S&P 500 fell to 1,050 (or lower) and unemployment went to 11% (or higher) that Bernanke wouldn't do 'something', and just let a deep recession / deep depression take place.
As long as the politicians can borrow, they will. As long as they have the potential to throw money at a (the) problem, they will. Right now they can still borrow and they still have the ability to throw money at the problems. Which means as sure as the sun rises in the east, this is what they'll do. But as others have said, they're crafty so it's unlikely it will be called QE3.
What will you all say if there is no QE3 adn the economy doesn't crash again? I haven't really heard anyone even so much as suggest it could happen. I think everybody will be singing love and praise to the Bernank and his great policies which saved our economy. I would consider "No QE3" as the first move in a very light and careful tightening cycle which is really not an indication that the economy is about to plunge head-first into the abyss. Unlike what some may think the Fed actually knows what it's doing some of the time and I would suspect that if Bernanke is confident enough not to push hard for QE3 things must be looking up despite the "disappointing and frustrating pace of the recovery" rhetoric. Can't make it too easy after all. Also, QE has done nothing for the underlying fundamentals of the economy (it has helped the financial system which may in time end up pulling the real economy forward (again)) so given that why is it smart to expect its absense to negatively impact the economy? If anything a confidence boost can be had from the Fed finally taking the economy off of life support.
Sure, like a broken clock is right twice a day. The Fed basically is a joke. All it seems to do is get the economy into a mess with short term policies and then the same institution is tasked with 'saving the economy'. Hence, joke. The problems started in 2007, it's now 2011. A proper free market would have sorted out the problems by now.............
Next jobs report = Friday 5 August http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm Next Fed meeting = Tuesday 9 August If the jobs report is bad on 5 August, this would be the third bad report in a row. So maybe QE3 will be announced as soon as 9 August. Alternatively, Bernanke could allude to QE3 at Jackson Hole, and formally announce it at the Fed meeting that follows on 20 September.