BUBBLE ben bernanke cant do anything to fix this market

Discussion in 'Economics' started by S2007S, Aug 24, 2011.

  1. S2007S


    Another day and another article on BUBBLE ben bernanke and what he can possibly do to help the economy and the markets, well before we even get that far to even come up with ideas or ways he can fix the economy lets just stop the nonsense, There is no fix! This has been years in the making and what BUBBLE ben bernanke has done was create even more problems. The great problem he has now is that no matter what he does the economy is still headed down! The greatest thing he could have done was to do NOTHING, that will be the headlines in the years to come when everyone finally realizes that BUBBLE ben bernanke should have never made the moves he has made. Everyone is praising him but in only a few short moments those praising him will realize his moves to help the economy from a depression weren't the right moves, keep thinking what you will but here I am repeating myself for the last few years telling everyone what he is doing now will irreversible in the years to come, that he has set the stage for greater problems. As I said the GREATEST thing BUBBLE ben bernanke could have done was to do NOTHING! Remember that!

    Bernanke Jackson Hole speech could rattle markets

    On Wednesday August 24, 2011, 9:45 am EDT

    By Steven C. Johnson

    NEW YORK (Reuters) - Whether the Federal Reserve likes it or not, its unprecedented monetary polices over the last few years have conditioned the financial markets to expect a helping hand when the going gets tough.

    That's why all eyes will be on Ben Bernanke, the central bank's chairman, when he speaks Friday at the Fed's annual symposium in Jackson Hole, Wyoming.

    With the stock market mired in a month-long slump and both the U.S. and euro zone economies in danger of sliding into recession, investors are bracing for a possible repeat of last year's performance, when Bernanke hinted the Fed would act if conditions deteriorated.

    Two months later, the central bank began pumping $600 billion into the financial system through direct purchases of Treasury debt, a second round of stimulus that markets dubbed "QE2."

    While the jury's still out on how effective these purchases have been, few are ready to rule out QE3 entirely.

    Following is a look at what the Fed could do.


    Wyoming may conjure up images of the American Wild West, but markets aren't expecting Bernanke to ride into the mountain resort with guns blazing -- at least not yet.

    While the economy has taken a turn for the worse -- growth ground to a halt in the second quarter and nearly flat-lined in the first -- there's a sense that the Fed will want to wait a bit longer to assess the impact of its past stimulus.

    Other Fed policymakers have sought to downplay expectations of an imminent QE3 announcement. St. Louis Fed President James Bullard was quoted in Japan's Nikkei newspaper saying that while the Fed could buy more bonds if the economy weakened, the time was not right for such a move.

    "Going into Bernanke's speech at Jackson Hole, people are positioned for a significant shift in policy. (But) we think financial market conditions have to deteriorate even further for more QE3," said Simon Derrick, head of currency research at Bank of New York Mellon.

    Nonetheless, traders are still expecting Bernanke to signal in some shape or form that he hasn't run out of bullets and could start shooting again if need be.

    "Based on our conversations with clients, we believe investors would be very surprised if the speech did not include a discussion of asset purchases," strategists at Goldman Sachs wrote in a note to clients.

    They said this could involve the Fed reinvesting proceeds from maturing assets into 10- and 30-year Treasuries to hold long-term interest rates low.

    "I think we'll see (QE3) because America needs growth, but I don't think we'll necessarily get it on Friday," said Neil Dwane, chief investment officer for Europe at RCM.

    Current market moves reflect this. While still down about 15 percent from late July, the S&P 500 rallied smartly Tuesday and the dollar has struggled against major currencies.

    More stock market gains could be in store if Bernanke gives a strong hint of future action. After Bernanke's speech last August, the S&P 500 began a rally that took it up nearly 25 percent by May 2011.


    Pulling the trigger now would have the element of surprise going for it and might spark the most aggressive market moves.

    There's been some talk in bond market circles that the 10-year yield's dip below 2 percent reflected a pricing in of QE3, though those moves probably had more to do with recent dismal jobs, manufacturing and growth data.

    Still, there are impediments to launching QE3.

    For one thing, Bernanke already caught investors off guard earlier this month and slowed a market rout when the Fed pledged to keep interest rates near zero until at least 2013.

    Steven Bell, director of GLC Ltd, a global macro hedge fund in London with $1 billion in assets, also noted that higher inflation may make the Fed cautious. "We have core inflation going up," he said. "It may be low but it's still going up."

    Political opposition is also on the rise. Texas Governor Rick Perry, a candidate for president, even said he would consider it "treasonous" if Bernanke "prints more money between now and the election" in 2012.

    That populist anger stems partly from the fact that Fed policies have done little to increase hiring or spark a housing market recovery.

    "The history is $600 billion (in bond purchases) hasn't really made any difference to the U.S. economy," Dwane said. "It's still where it was when he was talking about it last August: nearly in recession."

    If QE3 fails to boost growth or stokes inflation, markets may wish the Fed had done nothing.

    "Investors are becoming more cynical," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "Central bankers and governments seem to playing the role of the Dutch boy trying to plug holes in the dike."


    A humdrum speech that neither announces plans for QE3 or even hints at the Fed's willingness to act is probably the most unlikely scenario, as far as markets are concerned.

    If Bernanke did go that way, it could signal that the hawks were gaining the upper hand. Three Fed policymakers voted against extending the zero interest rate pledge to 2013 and have argued that the Fed cannot do much more to boost growth.

    Fred Dickson, market strategist at D.A. Davidson & Co, noted that policy remains very loose even without QE3. In addition to holding rates near zero, the Fed has said it will reinvest the proceeds of maturing assets on its "extraordinarily large" $2.8 trillion balance sheet.

    "So they have a stealth QE3 policy in place already," he said.

    No mention of future easing would likely hurt stocks but should spark a short-term dollar rally. Treasuries would likely fall as expectations of more Fed support faded.
  2. Along our current path, "there is no fix". Trimming, nibbling along the edges... won't cut it.

    For America to "revive", it will take a "fundamental transformation"... not the one JACKASS ODUMBO campaigned on.. but rather a reversion to the principles of the Founders...

    Doubt we will see it in our lifetimes.... at least not until the USA experiences economic collapse...

    :mad: :mad:
  3. WS_MJH


    It really is scary that the only time in the last twenty years there's been sustained growth was during two bubbles: tech and real estate/commodities. We either need another major bubble or we have to grow naturally, which is not punishing or demonizing businesses and entrepreneurs. With all the billions wasted on crap, it'd be good if they spread the wealth around to entrepreneurs who are trying their best but maybe don't have the capital.
  4. Larson

    Larson Guest

    The only thing Ben can provide today and tomorrow is false hope. It is running out.
  5. S2007S


    Thats EXACTLY what I have been screaming about for years, No one comprehends this, WHY, WHY, WHY does no one understand this, we have economists with PHDs and 2 masters that have no clue about this simple understandable situation. There is no such thing as organic growth in this economy. You cannot grow an economy with trillions in debt, easy money policies and all the QE you want. Thats not the answer and its sad to say this is going to unfold a lot worse than most people think, the best thing was to let the free markets handle the crisis and let things go where they had to go which meant no bailouts, no stimulus, no QE, no tarp, no tax credits.....NO NOTHING!!!!
    The only way this economy knows how to have sustained growth or better known as "asset bubbles" is through the the creation of bubbles. Thats what this economy has seen in the last 25 years, we have had real estate bubbles, commodity bubbles, technology bubbles, private equity bubbles, the list goes on and on. All the millions and millions of jobs created over the last 20 years will be gone forever. Those jobs are NEVER coming back. To grow naturally is a forgotten way, there will never be natural growth in this country because the economy has become to dependent on debt.
  6. S2007S


    All he is going to do is tell more lies, lies is what has brought this economy to where it is today!

    If he does anything close to QE3 run from these markets, if that is the only answer he can give to this crisis then he hasnt a clue whats going on in the real world!
  7. S2007S


    It would take years and years for people to come together to make such a transformation. There is absolutely no fix for the problems this economy is headed towards. The economic collapse that was going to fix this economy was here, every time it gets close enough they throw something at it to help prop it back up with out them ever letting even the smallest of recessions take course, they have never let the economic cycle really do its thing.

    Having 0% interest rates and easy money policies and backing the economy up with trillions in debt was never the answer, they think it is and those that think it is are complete fools!
  8. WS_MJH


    lulz, Bernanke has the pedal to the floor and we're only going twenty mph.