Opinion : Faking The Orgasm With Bernanke
I was wrong about QE3. I am truly unworthy.
It looks like I am not of the lofty levels of intellect and brain firepower to decipher the logic behind the enormity of the decision that has led to the the US stocks rallying to their highest “orgasmistic” levels since 2007.
In other words, it looks like I do not buy the QE3 idea. But I am not alone, it seems.
| San Francisco Fed FB Poll: What effect do you think QE3 will have on the U.S. economy? |
Well, the idea has been sold and the markets have bought into it even if it is doing so reluctantly .
Marc Faber : “Congratulations, Mr. Bernanke. I’m happy,” he told Bloomberg TV’s Betty Liu. “My asset values go up but as a responsible citizen I have to say the monetary policies of the U.S. will destroy the world.”
Donald Trump : “the [Federal Reserve’s] numbers are false; they’re being created and people like me may benefit, but it’s ultimately not good for the economy.” CNBC
Stephen Roach: “QE3 is the biggest US charade ever”
Ron Paul: “Country Should Panic Over Fed’s Decision”
Rosenberg: “If The US Is Truly Japan, The Fed Will End Up Owning The Entire Market”
Fed’s Moves Could Prove Destabilizing, Volcker Tells CBS
Where does this lead us ?
Another week, at most, of celebrations and stock market fan fare. Bernanke mentioned stocks directly.
“To the extent that the prices of homes begin to rise, consumers will feel wealthier, they’ll begin to feel more disposed to spend. So house prices are one vehicle. . . . And stock prices – many people own stocks directly or indirectly. The issue is whether improving asset prices will make people more willing to spend.”
It is beyond me.
| How Much Does the Fed’s Plan Really Help Main Street? |
I suspect the QE money will leak offshore mainly on its tendency to weaken the USD. FED’s balance sheet is expected to balloon to $ 4 trillion by end 2013.
And we can expect more of such news like the one below.
| U.S. Bondholders Lose in Brazilian Bank Collapse |
Do worry even if its not you. It is probably one of the mutual funds you own.
Globally, major central banks will pursue various devaluing stimuli.
| BOE Expected to Follow Fed With More Stimulus |
Then reality would set in.
Bernanke has shaken our faiths in the value of money, right down to our very own currencies. So far, this has manifested in the massive rally of gold and silver, above the other asset classes.
It will not be long before the concept of paper gold will also be subject to debate.
I am not suggesting that the house of cards built on fiat money is going to take a tumble in the weeks ahead. Fear is a good friend of the lemming world of the markets. Fear leads to euphoric adrenaline rushes that we are witnessing at the moment.
The I Phone 5 is likely to keep everyone happy and distracted for a while.
Reality is this.
1. Global Manufacturing Update Indicates 80% Of The World Is Now In Contraction
2. Chinese Banks’ Bad Loan Ratio May Double by Year-End: HKEJ
3. Obama’s New Normal’s New Populism: 165 Million As State Dependents?
| 4. Incomes declined in 2011 for fourth straight year |
| 5. Egan-Jones cuts U.S. debt rating |
6. Fiscal cliffs in US and Japan looming.
| Bernanke: Fed Cannot Offset Negative Effects Of Fiscal Cliff |
| 7. Inflation Expectations Suggest 5% Inflation Is In The Cards |
For dumb old me, I am going in for the ride, a little pensive, a little doubtful and mostly, sad.
Because deep inside, we all know that nothing is going to change.