2 QE, or not 2 QE, that is the question – waiting on the Fed

Update: The ‘sages’ at the Fed speak:

Federal Reserve officials moved to prevent the Fed’s huge balance sheet from shrinking, an attempt to spur the U.S. economy’s recovery and avoid deflation.

At the end of a policy-meeting Tuesday, Fed officials said they would reinvest the proceeds from expiring mortgage-backed securities into longer-term U.S. Treasurys. The move should help a weakening economy by keeping mortgage rates low….

…The latest move by the U.S. central bank represents just a tweak in its strategy for managing its huge portfolio. But it’s a significant one since it could be a step towards new large purchases of both government bonds and mortgage-backed securities.

The Fed said it will release more details about the reinvestment operation later Tuesday….

Will Gentle Ben and Team FOMC give the markets what they want and talk QE2 in their Statement this afternoon?..the SF Fed came out and said we may have a SECOND recession in the next 1-2 years. Uhm that’s a double dip peeps face it, we never got out of the ‘ditch’ Obama keeps rambling on about.

The Zombie Market has started going up on BAD data again, expecting QE2. If Daddy takes the Punch Bowl away what will they do? Bonds and Stocks are moving TOGETHER, really WRONG that is.

WSJ:

Market speculation that the Federal Reserve will act to boost the economy at its meeting today has grown recently, but most analysts caution the U.S. central bank is unlikely to take any major steps.

U.S. stocks were higher Monday amid investors’ hopes that Friday’s weak jobs report could prompt the Fed to either resume buying assets, reduce an interest rate it pays banks on reserves to zero, or signal it will keep its benchmark short-term interest rate near zero for longer….

And what COULD they do for QE2, I am hoping the MS 1 pg refi for all is coming personally, I think it would boost consumer spending and cost nada.

These SOOPERGENIUSES have tried everything EXCEPT helping homeowners DIRECTLY, and it has ALL FAILED. Know why? Cause the ROOT of the collapse is HOUSING and CONSUMERS drive the US GDP that’s why. And I don’t even need a string of letters after my name to tell you that. Heh.

…The Fed could resume purchases of Treasury debt or mortgage-backed bonds, likely by using proceeds from existing holdings of such debt as they mature — at least to start with. It could stop paying interest on the excess reserves that banks hold at the Fed to encourage banks to lend more. The central bank currently pays 0.25% on excess reserves. Or it could try making a more explicit pledge to keep its benchmark short-term rate near zero for longer than the “extended period” phrase it has been using since March 2009.

But most analysts believe the Fed will only talk about these options at Tuesday’s meeting — leaving any action for if and when the economic outlook gets really bad. Dan Greenhaus, analyst with Miller Tabak & Co., believes the Fed will adopt a “wait and see” attitude, assessing incoming economic data and any further developments in the fiscal outlook before the Sept. 21 meeting….

Oh, they are going to wait until the economy ‘gets really bad’. Gee what the hell is ‘really bad’, we are already at 16% UE folks and here in AZ walkaways are spreading. It is nationwide, and once it is in the bloodstream of regular folks that they too can default as Hyatt did, well, it is a SEA CHANGE in attitudes these SOOPERGENIUSES are IMO unprepared for. If we, the people, really STARVE THE BEAST, GO GALT, whatever you want to call it, well if/when that happens the ‘system’ will REALLY be tested.

Why not just address HOUSING in a REAL way instead? Hmmmm?

The geniuses said we have NEVER had a consumer led housing led recession before..well guess what WE DID, the MOTHER of recessions. Time to think OUT OF THE BOX. If the consumers and their BIGGEST ASSET, their homes led us INTO recession then GEE, maybe addressing that the way they SAID they were with TARP but didnt, will help lead us OUT.

Consider this the Twofer Tuesday thread too, school has begun and I am on duty!

PS More bad economic data-inventory correction is SO OVER

and here is Calculated Risk on the ever-rising REO Inventory

August 10, 2010. Tags: , , , , , , , , , , , , , , , . Economy, Finance, Foreclosures, Housing, Obama Administration, Politics, Popular Culture, TARP, Taxes, Unemployment Statistics, Wall St.

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