Why I think there will be no QE3.

[touchring]

2012 December will be the next US Presidential elections. If the Fed decides on QE3, wouldn't that be too risky for the Democrats?

Scenario A: Assuming if QE3 succeeds, and inflation is still subdued, the stock market rises until June 2012. Then what happens next? QE4?

Scenario B: QE3 creates inflation havoc ($200 oil prices), what will happen to Democrats come December 2012?

It appears to me whether QE3 succeeds or fails, the outcome will be no good for the Democrats.

On the other hand, if rates start rising this year, and stock and commodities crashes by July/August 2011, there will be sufficient time to engineer another stock market boom by Q4 2012.

If Obama is smart, he will prevent QE3.

Logical?

[kduffey]

Re: Why I think there will be no QE3.

Scenario C: No QE3, stock market tanks and economy continues to be stagnant.

There is no solution. I think the end is the same which is a lower standard of living whether it is via heavy inflation or a deflationary depression. As such, the party in power will be punished continually for this decline in the standard of living.

With that said, I can't imagine the politicians don't take the inflationary route since it is at least a little more deceptive to the masses and they can claim unemployment is dropping and stocks are rising (even if bread costs $30).

Pause b/t QE2 and QE3 could provide a good buying opportunity to load up on more silver and other assets.

[don]

Re: Why I think there will be no QE3.

2012 December will be the next US Presidential elections. If the Fed decides on QE3, wouldn't that be too risky for the Democrats?

Scenario A: Assuming if QE3 succeeds, and inflation is still subdued, the stock market rises until June 2012. Then what happens next? QE4?

Scenario B: QE3 creates inflation havoc ($200 oil prices), what will happen to Democrats come December 2012?

It appears to me whether QE3 succeeds or fails, the outcome will be no good for the Democrats.

On the other hand, if rates start rising this year, and stock and commodities crashes by July/August 2011, there will be sufficient time to engineer another stock market boom by Q4 2012.

If Obama is smart, he will prevent QE3.

Logical?

Framing the argument within a Dem/Rep framework, the question would be how much time can the two-party shuffle buy? Who's in, is out, followed by who's now in, is now out. We're already seeing that played out for the nth time with the Republican's drop in popularity. Once they controlled the House, they had to do something.

[touchring]

Re: Why I think there will be no QE3.

Scenario C: No QE3, stock market tanks and economy continues to be stagnant.

There is no solution. I think the end is the same which is a lower standard of living whether it is via heavy inflation or a deflationary depression. As such, the party in power will be punished continually for this decline in the standard of living.

With that said, I can't imagine the politicians don't take the inflationary route since it is at least a little more deceptive to the masses and they can claim unemployment is dropping and stocks are rising (even if bread costs $30).

Pause b/t QE2 and QE3 could provide a good buying opportunity to load up on more silver and other assets.

Marc Faber said there will be a pause before QE3. In view that the presidential election will come end 2012, QE3 may be on hold until early 2012.

[BK]

Re: Why I think there will be no QE3.

Obama list of Reasons to WHY have QE3 (Donor list for 2008 Campaign) - None of whom are interested in Austerity or a restrained Federal Reserve (of course, I may be wrong).

University of California $1,591,395
Goldman Sachs $994,795
Harvard University $854,747
Microsoft Corp $833,617
Google Inc $803,436
Citigroup Inc $701,290
JPMorgan Chase & Co $695,132
Time Warner $590,084
Sidley Austin LLP $588,598
Stanford University $586,557
National Amusements Inc $551,683
UBS AG $543,219
Wilmerhale Llp $542,618
Skadden, Arps et al $530,839
IBM Corp $528,822
Columbia University $528,302
Morgan Stanley $514,881
General Electric $499,130
US Government $494,820
Latham & Watkins $493,835

[touchring]

Re: Why I think there will be no QE3.

Sure, Obama will be thrilled with $200 per barrel oil prices by 2012. lol

Demand from China will still be rising even if oil prices goes beyond $200 a barrel.


http://www.frumforum.com/higher-oil-prices-blame-china

[touchring]

Re: Why I think there will be no QE3.

Obama list of Reasons to WHY have QE3 (Donor list for 2008 Campaign) - None of whom are interested in Austerity or a restrained Federal Reserve (of course, I may be wrong).

Goldman Sachs $994,795

http://www.smh.com.au/business/marke...413-1dddf.html

Goldman Sachs turns bearish on oil

Investment bank Goldman Sachs has recommended clients take profits on their investments in key commodities such as crude oil, copper and platinum.
Goldman Sachs said in a research note published yesterday, Australian time, there were signs that demand for oil was softening in the world’s largest market, the US, and that the price had peaked for the time being.

[BK]

Re: Why I think there will be no QE3.

First, I'm wrong regularly and often. I'm not stating there won't be a pause between QEII and QEIII. I just know lots of folks who feel really-really-really good about the returns on their 401K / Retirement Savings/investment accounts - it makes them feel good about lost value in their Real Estate holdings.

Is it possible that QEIII happens earlier than you expect - to keep Retirement/Investment accounts up in value - even if that brings $140-$160 a barrel oil. Obviously, higher oil could result in down draft for US Equities.

No one seems to be placing expensive Oil on the President - after all how can you blame Americas first Environmentalist President for expensive oil - but, people hate to be losing money on all fronts More than they are concerned about paying higher Gasoline and Food costs.

[c1ue]

Re: Why I think there will be no QE3.

Your premise is too vague.

Are you saying no QE3 ever?

No QE3 this year?

No QE3 this year or next year?

The answer to the first question is: No. There will be a QE3 at some point.

The second question? possibly. But highly doubtful because the economy is already starting to slow down due to high energy prices. The one thing guaranteed to doom an Obama re-election is the return of a recession, and it takes 6 months for a QE to filter through into the economy - at least according to neoliberal economist sellouts. Thus a QE3 in Q2 2012 or later will be too late for the elections, and arguably Q1 2012 is cutting the edge too finely.

The third question? Almost certainly no.

The wild card? An unanticipated early kickoff to the balance of payments crisis. This is the only thing that would actually result in no QE3, and that also assuming it starts without being created by a QE3 (or QE4, or whatever).

[touchring]

Re: Why I think there will be no QE3.

First, I'm wrong regularly and often. I'm not stating there won't be a pause between QEII and QEIII. I just know lots of folks who feel really-really-really good about the returns on their 401K / Retirement Savings/investment accounts - it makes them feel good about lost value in their Real Estate holdings.

Is it possible that QEIII happens earlier than you expect - to keep Retirement/Investment accounts up in value - even if that brings $140-$160 a barrel oil. Obviously, higher oil could result in down draft for US Equities.

Yes, definitely, but the maximum effect of a QE comes within the first couple of months so they can't launch QE3 too early, unless they are planning for QE4 next year. Therefore, it is possible that QE3 may not come until the beginning of 2012. This would mean a 3-4 months window for the markets to correct.

[chedir007]

Re: Why I think there will be no QE3.

What about other strategies that iTulip has mentioned in past the government can take besides QE3? For example induce foreigners to dump their US holdings and cause inflation?

[flintlock]

Re: Why I think there will be no QE3.

I just know lots of folks who feel really-really-really good about the returns on their 401K / Retirement Savings/investment accounts - it makes them feel good about lost value in their Real Estate holdings.

This is exactly what I was telling a friend the other day. In my business, there has been a big change in attitude about spending from late 2008/early 2009 when the market was down. At that time the sky was falling and even the "wealthy" were holding on tight to their cash.