Announcement

Collapse
No announcement yet.

QE2, Round Two

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • QE2, Round Two

    US stocks fall after Fed chief says economy needs more stimulus
    2010-12-07 06:50:00

    US stocks fall after Fed chief says economy needs more stimulus

    New York, Dec 7 (DPA) US stocks fell Monday after Federal Reserve Chairman Ben Bernanke said he would not rule out more monetary interventions to prop up the struggling economy.

    Bernanke made the remarks in an interview aired Sunday by broadcaster CBS.

    The US central bank in November announced a controversial plan to buy up $600 billion in government bonds over the coming eight months. The new round of 'quantitative easing' was criticised by some conservatives and foreign governments for pushing down the value of the dollar.

    Bernanke said it could take four or five years until the US job market normalises. The weak recovery could lead to additional monetary interventions, but any move will depend on economic indicators and inflation.

    The blue-chip Dow Jones Industrial Average slid 19.9 points, or 0.17 percent, to 11,362.19. The broader Standard and Poor's 500 index dipped 1.59 points, or 0.13 percent, to 1,223.12. The technology-heavy Nasdaq Composite Index rose 3.46 points, or 0.13 percent, to 2,594.92.

    The US currency gained against the euro to 75.16 euro cents from 74.55 euro cents Friday. The dollar edged up against the Japanese currency to 82.64 yen from 82.53 yen.
    “the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all” -- Joan Robinson

  • #2
    QE3, QE4, Qe5 Or Just A Larger QE2?

    Posted: December 6, 2010 at 5:32 am
    QE3, QE4, Qe5 Or Just A Larger QE2? - 24/7 Wall St.

    Ben Bernanke, out on another tour of the country to support the Fed’s policies, told “60 Minutes” that the $600 billion planned purchase of US bonds may be inadequate. “We’re not very far from the level where the economy is not self-sustaining,” Bernanke told the news show. “It’s very close to the border. It takes about 2.5 percent growth just to keep unemployment stable and that’s about what we’re getting.”

    Bernanke probably made the comment without consulting his fellow Federal Reserve governors. They have supported Bernanke’s policies so far, but some have objected to the bond purchase programs. That means he may not have the support he needs to expand the fund to buy additional Treasury paper. Bernanke may find that he has spoken too soon.

    The first issue with a QE3 facility is why QE2 was limited to $600 billion. The Fed and its analysts and governors have been modestly optimistic about US GDP expansion the rest of this year and into next. The Fed’s most recent Beige Book showed some very modest recovery in the job market. It has apparently only taken one report–the November unemployment numbers–to cause Bernanke to become more pessimistic about the American economy.

    Bernanke said in the interview that unemployment could remain above 6% for the better part of the next decade. He sees QE2 as a way to bring down interest rates, stimulate the economy,and by that stimulation add jobs. Then a QE3, QE4, and QE5 may be needed over the next three or four years to keep the recovery on a positive track

    Bernanke has fired the first shot in what is likely to be a difficult negotiation with some of the Fed’s other governors. It is also likely to enrage his opponents who believe that the purchase of bonds does nothing to help the economy because interest rates are already at nearly historic lows. Banks do not loan money because they fear risk. Companies do not add workers because they fear another recession. The purchase of another several hundred billions of dollars in Treasuries is not likely to change any of that.

    Douglas A. McIntyre


    Read more: QE3, QE4, Qe5 Or Just A Larger QE2? - 24/7 Wall St. QE3, QE4, Qe5 Or Just A Larger QE2? - 24/7 Wall St.
    “the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all” -- Joan Robinson

    Comment


    • #3
      Good Charlie Rose tonight on this very topic.

      All about gold with John Hathaway, Peter Munk, & James Grant

      Charlie Rose - Home
      “the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all” -- Joan Robinson

      Comment

      Working...
      X