cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
Veteran Advisor

What do you think happens tomorrow with bomber bens speech?

SO this morning after milking cows I read some stuff about the Jackson holers get together.  Than after breakfast I went out and pumped a retention pit from the Holding pen into the slurry store.  While I saw that greyish liquid swirl around and the smell of money waft around I was reminded that the jackson holers were stirin up the same stuff and were gonna announce the cure for all the worlds ills tomorrow.  ANy ideas what them jackson holers will do tomorrow?  I am leaning towards a QE 3 with some type of variation on the same ole theme. If that does happen corn will be on a rocket shiop. if not I think we trade sideways to slightly lower.

 

In the livestock a QE3 will be disasterous and mean bad times to come for a while as the inflation will eat up our merry consumer.  No QE3 and we can hopefuly see more light without the frieght train attached.

 

Any thoughts what the Jackson holers will do?  I am especially ammused that the intern IMF chief is gonna be there. Like she is gonna have a new idea!

0 Kudos
11 Replies
Highlighted
Honored Advisor

Re: What do you think happens tomorrow with bomber bens speech?

To parrot what the smarter, better paid folks are saying "No QE3 out of Jackson".  That`s not to say it won`t come later under a different name.  There`s a thought that as unpopular as Qe2 was, the people will need to suffer a little before a Qe3 will be welcomed.  Let`s count our choices, raise taxes (in a recession with +9% unemployment? Nope).  Austerity measures? (The way the furniture was thrown around in Wisconsin?  Fugitaboutit)  Fire up printing presses? (Ding Ding Ding. That`s the easy way out and most likely. Although it will also end badly at some point) .   Actually the QE`s are the farmer`s friend, you can`t buy the baby milk if your entitlement check is cut.  JMHO

0 Kudos
Highlighted

Re: What do you think happens tomorrow with bomber bens speech?

One variant that's been discussed is a replay of Operation Twist which the Kennedy Admin tried on a modest scale with similar results. Basically that was where they capped the yield on the long treasury with market operations.

 

Operation Twist

The Federal Open Market Committee known as Operation Twist (named for the Twist dance craze of the time[1]) began in 1961 was created to flatten the yield curve in order to promote capital inflows and strengthen the dollar. The Fed utilized open market operations to shorten the maturity of public debt in the open market. Although this action was marginally successful of reducing the spread between long-term maturities and short-term maturities, it did not continue for a sufficient period of time to be effective.[2] Yet, despite traditionally being considered a failure, the action has subsequently been reexamined in isolation and been found to have been more effective than originally thought.[1] As a result of this reappraisal, similar action has been suggested as an alternative to quantitative easing by central banks.[1]

 

Don't really see the point with the 10 yr already near historic lows in yield. Maybe I'm wrong they can take it well under 2% in which case banks make out like bandits in the carry trade- holding all those free short term deposits and investing them in an appreciating guanranteed risk free asset (and no need to lend when they're handed a six inch putt- a problem). But in theory anything else looks good- stocks because there is no yield elsewhere, farmland looks fabulous with a 3% yield, mortgages on houses are nearly "free."

 

Sorry to be a wet blanket but it seems the final end game of what got us here. Negative real interest rates which cause everyone to accept risk in order to try to get any semblance of real return on money. Which pushes up prices of risky assets and makes everyone happy for a while, then the risky assets implode and everyone is screwed. Then you offload the losses on the public balance sheet in order to save "the economy."  Rinse, repeat until totally cleaned.

 

Might work for a while but the lesson from the last 3 years seems clear. The wealth effect doesn't help the real economy much. Talking heads on TV may be real happy that the stock market is up but for the 90% of the population that owns less than 10% of the stock it isn't going to change their behavior in terms of consumption.

 

There may be abundant jobs as yacht deckhands and private security guards but those probably don't pay well enough to make much difference in aggregate demand. Which means that the guy who owns the yacht has a problem too, he just doesn't know it yet.

 

0 Kudos
Highlighted
Veteran Advisor

Re: What do you think happens tomorrow with bomber bens speech?

"he just doesn't know it yet"

 

BINGO

 

that is a lot of what ails the USA right now....short sighted policies. We need a manufacturing base, and we need it now. It is not going to happen, though, and all the last two administrations have done is to driver further into the ditch.

 

hard to find any policies that actually make sense, and that is what makes the argument that you need a collapse to help Americans see the light so persausive.

 

like I said before, somewhere in the wings, an Adolf Hitler is getting ready. Not a good time to be in America.

 

The goose is cooked.

0 Kudos
Highlighted
Honored Advisor

Re: What do you think happens tomorrow with bomber bens speech?

I'm thinking that hurricane Irene will stimulate the economy far more than anything Ben says.....Just my two cents worth.

0 Kudos
Highlighted

Re: What do you think happens tomorrow with bomber bens speech?

That would be consistent with Krugman's "war with aliens" meme.

 

 

0 Kudos
Highlighted
Veteran Advisor

Re: What do you think happens tomorrow with bomber bens speech?

That is an awesome post Read!

 

I was talking to a friend the other day and I asked him "why would the thirties be so bad"?  We need a reset pretty soon. the longer we go with out one the worse this thing is gonna crash.  Not to be to preachy but in the ancient laws of the Hebrews there was the year of Jubilee. It wasn't a free pass but it was a reset. It lept those who would manipulate the money and the laws from being able to to manipulate for generations. We need something like that now.  I am thinking the reason we don't have a collapse is so that the guys  in noxies yacht example Really don't have anything either.  

 

The big question is....is anything real? 

 

This run up started last year after Jackson hole. Could this meeting be the end?

0 Kudos
Highlighted
Veteran Contributor

Re: What do you think happens tomorrow with bomber bens speech?

we need a manufacturing base....   Red, you should go to new york and ring the bell, because they don't get it.   You are exactly right, you can't have an economy, without an economy.  This country has been all about the "DOW" and stock prices since the eary 80's, and throw momma under the bus, aka manufacturing, in order to get a higher stock value and golden parachute.   As long as the policy is prop the dow, and screw the american worker, this thing will NEVER straighten out.  I have heard some mindless pundants say 50% of the population pays no income tax, to that I would say, no ####.  They don't pay taxes because they don't get paid #### and dont qualify to pay taxes, because....    Our manufacturing base has been gutted, and replaced with wal mart greeters.    Perhaps they have forgotten economics from college, for every core mfg. job you create multiple service jobs, not the other way around... but what do I know.  But don't worry, the new economy is coming, 90 % peasants and 10% over lords....   Oh well, nothing changing anytime soon, that you can take to the bank.

0 Kudos
Highlighted

Why I think Bernake is wrong

In his 2000 paper about how to keep the US from becoming like Japan, he talked about bond purchases (done that), extended period of O rates language (done that) and finally targeting inflation of 3-4% for an extended period of time- basically demanding that everyone borrow money and buy assets.

 

Made a nice paper, but what would happen is that da boyz would immediately buy corn and oil and they would go to $10 and $200 and the real economy would continue to get worse as the few get richer on asset inflation and the rest continue to see a decline in disposable income after basics.

 

They met the bond vigilantes in the 90s but nobody saw the commodity vigilantes coming.

0 Kudos
Highlighted
Senior Contributor

Re: What do you think happens tomorrow with bomber bens speech?

maybe nothing

0 Kudos