When the facts change, I change my mind. What do you do? -- John Maynard Keynes

Thursday, March 28, 2013

QE Sedative

Ben Bernanke, the Fed chairman who didn't see the housing crisis, debt crisis, and ensuing crash coming, supposedly will end his tenure at the Federal Reserve. I guess he wants to get out before the really hard work commences of trying to unwind everything the Fed has done the last 4+ years--it's not going to be pretty, and history tells us it always ends badly. In the meantime, the Fed keeps pouring more sedatives (QE) into the sick patient--

RealClearMarkets - QE: A Sedative That Robs The Economy of Vitality: " . . . In the end, no matter how you want to analogize or frame this process, central banks cannot under any circumstances create value. Federal Express, another news item this week, is grounding planes and reducing capacity because businesses in Asia are shipping less and businesses in the United States are using "lower margin" services (ie, cutting shipping costs). Is perpetual QE a realistic answer to these concerns? QE is the monetary equivalent of the economic adjustments taking place in PIIGS nations. It is a gutting and hollowing of the productive sectors in the name of finance, robbing vitality from the real economy. Nations are left impoverished where it is applied, but nobody cares while it happens because it feels so very pleasant and sedate. For its part, FedEx is doing exactly what Chairman Bernanke wants to see. The company is seeing a reduction in earnings growth, reducing headcount, cutting capital expenditures, but, in a manner consistent with the asset price focus, massively increasing its stock repurchase plans. Less capital, more money. Whether you want to classify them as illusionists, anesthesiologists or just plain dope dealers, central banks have no answers, only the ability to coax your fears to sleep, hidden beyond the cloudy dreams of seemingly perpetual bull markets. . . " (read more at link above)


The Big Picture

Financial Crisis - The Telegraph

JohnTheCrowd.com | The Sailing Website

Craig Newmark - craigconnects