QE1 = Quantitative Easing 1
QE2 = Quantitative Easing 2
Q2 = Second Quarter
On March 18, 2009, Bernanke announced part of QE1, $300 Billion worth. The price of gold rose about 7.2% in the next 24 hours, from $893 to $957. I mention the gold price, denominated in US$, because it is widely considered to be a barometer on the health of the US $.
http://www.calculatedriskblog.com/2010/10/qe1-timeline.html
As outlined by the staff at CalculatedRisk, QE1 had its roots in the September 18-September 25 time-frame. Thursday September 18 was the day when the Dow crashed due to huge coordinated withdrawals by as-yet-un-named but large market participants.
September 25 was the day Washington Mutual (with $300 billion in liabilities) was assigned to Chase (who paid $2 Billion for it). As I remember it, that was the most panic-stricken week in the financial world during the 2007 to 2009 time-frame.
Various QE announcements were made during the months following September 2008, up to March 2009.
QE2 was approximately formally announced on November 3, 2010.
http://www.kitco.com/LFgif//aunov10.gif
During the weeks that followed, gold rose from 1345 to 1420, about 5.6%.
In both cases, gold retraced its steps and backed off from its short-term highs, before continuing the price increases that got it to its recent high ($1570) and today's price ($1530).
One of the land-mines that stopped the world economy during the 2008-2009 time-frame was banks' unwillingness to loan to each other, because nobody knew who had what toxic credit derivatives on their books.
Now those toxic credit derivatives have been moved onto 'the books' of the US government, though they have obviously used enough intermediaries to create a genuine hall of mirrors.
If you did into Karl Denninger's archives, you will find some great charts that show how much of the US economy is currently a "command economy" - i.e., how much of current GDP/GNP is a direct result of government stimulus.
It's a scary number. If you can find that chart, it will become obvious - the withdrawal of QE will remove 5 to 10% of the US economy overnight.
Of course, the GNP numbers still include government spending - the $trillions that go to defense contractors & "homeland security" contractors.
In other words, with or without QE, the US government has become a "Command Economy", not a free market - it is dependent on the government to provide enough demand to prevent a full-blown Economic Depression.
As many have pointed out, the Fukushima quake was not kind to the world economy. But since it occurred on March 11, 2011, near the end of a fiscal quarter, its full effects won't be seen until the end of the second fiscal quarter - June 30 ... coincidentally, isn't that when QE2 ends ? What a coincidence ! - in this case, I think it may actually be a coincidence.
It's very possible that even with a QE3, the US economy will crater when the world Q2 (second quarter 2011) numbers come out.
The Fukushima Quake almost destroyed the 2nd or 3rd largest economy in the world. The only reason it didn't destroy it yet is because the Japanese people are continuing their 'economic activity' in a country that has been quite liberally sprinkled with radiation, including plutonium (sprinkled would be an understatement).
The problem with QE3 is that the "Jig is Up" on the US $. Any administrator in any sovereign wealth fund on earth can dig up the Fed's money curves ... one of them is named "BOGNONBR" (Board of Governors, non borrowed reserves).
EXCRESNS is a fun one to watch -
Up till March 11, 2011, Japan was a net buyer of US debt instruments (aka US bonds). As of the time of the Fukushima earthquake, Japan became a net seller of US bonds.
At the same time, China, one of the other former top 3 buyers of US bonds, was following through on their threat to finance much less US debt.
And, coincidentally, within a week before March 11, 2011, Bill Gross @ PIMCO, one of the biggest private bond funds in the world, announced that they would stop buying US bonds.
In other words, the US had already lost China as a "top buyer" of US bonds by the beginning of March, 2011, and in the first 2 weeks of March, 2011, lost 2 more primary customers to finance US debt.
GAME OVER !
That the US has to finance its own debt by printing money is becoming glaringly obvious.
That's the problem with QE3 - the world knows that the US is printing money. So if the US gov. announces a QE3, the only way the US $ can maintain its value relative to other currencies is by the devaluation of those currencies.
That the US $ maintains some strength relative to the Euro is not exactly a testament to the strength of the US $.
If I was Bernanke, I would think about raising interest rates a nominal amount, to goose the US $ relative to other currencies. It won't really affect the interest costs of the US gov. that much because - they're already bankrupt (printing money to pay the interest on the debt).
They also have a strong need to goose the economy before June 30, so that the effects of the slowdown caused by Japan's collapse are less visible, to avoid a heavy-duty stock market collapse.
Just out of curiosity - how many AT members think Q2 2011 numbers (economic period April 1 to June 30, 2011) will be strong ?
QE2 = Quantitative Easing 2
Q2 = Second Quarter
On March 18, 2009, Bernanke announced part of QE1, $300 Billion worth. The price of gold rose about 7.2% in the next 24 hours, from $893 to $957. I mention the gold price, denominated in US$, because it is widely considered to be a barometer on the health of the US $.
http://www.calculatedriskblog.com/2010/10/qe1-timeline.html
As outlined by the staff at CalculatedRisk, QE1 had its roots in the September 18-September 25 time-frame. Thursday September 18 was the day when the Dow crashed due to huge coordinated withdrawals by as-yet-un-named but large market participants.
September 25 was the day Washington Mutual (with $300 billion in liabilities) was assigned to Chase (who paid $2 Billion for it). As I remember it, that was the most panic-stricken week in the financial world during the 2007 to 2009 time-frame.
Various QE announcements were made during the months following September 2008, up to March 2009.
QE2 was approximately formally announced on November 3, 2010.
http://www.kitco.com/LFgif//aunov10.gif
During the weeks that followed, gold rose from 1345 to 1420, about 5.6%.
In both cases, gold retraced its steps and backed off from its short-term highs, before continuing the price increases that got it to its recent high ($1570) and today's price ($1530).
One of the land-mines that stopped the world economy during the 2008-2009 time-frame was banks' unwillingness to loan to each other, because nobody knew who had what toxic credit derivatives on their books.
Now those toxic credit derivatives have been moved onto 'the books' of the US government, though they have obviously used enough intermediaries to create a genuine hall of mirrors.
If you did into Karl Denninger's archives, you will find some great charts that show how much of the US economy is currently a "command economy" - i.e., how much of current GDP/GNP is a direct result of government stimulus.
It's a scary number. If you can find that chart, it will become obvious - the withdrawal of QE will remove 5 to 10% of the US economy overnight.
Of course, the GNP numbers still include government spending - the $trillions that go to defense contractors & "homeland security" contractors.
In other words, with or without QE, the US government has become a "Command Economy", not a free market - it is dependent on the government to provide enough demand to prevent a full-blown Economic Depression.
As many have pointed out, the Fukushima quake was not kind to the world economy. But since it occurred on March 11, 2011, near the end of a fiscal quarter, its full effects won't be seen until the end of the second fiscal quarter - June 30 ... coincidentally, isn't that when QE2 ends ? What a coincidence ! - in this case, I think it may actually be a coincidence.
It's very possible that even with a QE3, the US economy will crater when the world Q2 (second quarter 2011) numbers come out.
The Fukushima Quake almost destroyed the 2nd or 3rd largest economy in the world. The only reason it didn't destroy it yet is because the Japanese people are continuing their 'economic activity' in a country that has been quite liberally sprinkled with radiation, including plutonium (sprinkled would be an understatement).
The problem with QE3 is that the "Jig is Up" on the US $. Any administrator in any sovereign wealth fund on earth can dig up the Fed's money curves ... one of them is named "BOGNONBR" (Board of Governors, non borrowed reserves).
EXCRESNS is a fun one to watch -
Up till March 11, 2011, Japan was a net buyer of US debt instruments (aka US bonds). As of the time of the Fukushima earthquake, Japan became a net seller of US bonds.
At the same time, China, one of the other former top 3 buyers of US bonds, was following through on their threat to finance much less US debt.
And, coincidentally, within a week before March 11, 2011, Bill Gross @ PIMCO, one of the biggest private bond funds in the world, announced that they would stop buying US bonds.
In other words, the US had already lost China as a "top buyer" of US bonds by the beginning of March, 2011, and in the first 2 weeks of March, 2011, lost 2 more primary customers to finance US debt.
GAME OVER !
That the US has to finance its own debt by printing money is becoming glaringly obvious.
That's the problem with QE3 - the world knows that the US is printing money. So if the US gov. announces a QE3, the only way the US $ can maintain its value relative to other currencies is by the devaluation of those currencies.
That the US $ maintains some strength relative to the Euro is not exactly a testament to the strength of the US $.
If I was Bernanke, I would think about raising interest rates a nominal amount, to goose the US $ relative to other currencies. It won't really affect the interest costs of the US gov. that much because - they're already bankrupt (printing money to pay the interest on the debt).
They also have a strong need to goose the economy before June 30, so that the effects of the slowdown caused by Japan's collapse are less visible, to avoid a heavy-duty stock market collapse.
Just out of curiosity - how many AT members think Q2 2011 numbers (economic period April 1 to June 30, 2011) will be strong ?
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