President Obama is a joke! However I am not laughing. To take all the vacations he has taken, played all the golf games he has played, thrown all the big White House parties with Hollywood guest and then pretend like he has been hard at work all along is very sad. I used the word "pretend" purposely here because only a narcissist would believe that about himself and they live in a "pretend" version of their own reality. It sure does not resemble mine or anyone around me.
President Obama has not offered to Congress or the Senate any legislation of his own creation or initiative. For someone hailed as "so much smarter" than anyone else, why does he relegate this to others? My best guess is everything he supports is written by someone else so he can blame any failure on them. If it succeeds he has no problem taken credit for the work of others.
Only a blamer and emotional blackmailer would resort to making the comparisons of congress' potential shortcomings to his own children. This is an attempt to shame the congress and senate, however what he fails to recognize is he has now placed enormous expectations on his children to always succeed better than congress or given them the supreme position of being princesses that are uniquely better than others who ultimately are beneath them. This will make narcissist of them as well.
He is lying when he says the Treasury cannot pay our government's bills without raising the debt limit and taxes. To service the debt owed takes less than 10% of the budget. What the US government could not do is continue to SPEND money they do not have or have not stolen from us yet on things they should not be spending on anyway.
My hope and prayers are for some real MEN and/or WOMEN to get into office in 2012 and start making responsible adult decisions.
I know these things to be true not because I am better or smarter but because I know I have made too many similar mistakes in my own life. I know the damage that can and is being done by this man and his minions.
Sincerely,
Kenneth
Wednesday, June 29, 2011
Obama Scolds Congress - Acts of Narcissism & Lying
Tuesday, June 28, 2011
QE3 via Financial Repression
The Fed and the Irresponsible Power hungry in Washington DC care not about you and I. They are going to take our money if we let them. We have got to vote out as many of them as possible if our country is to be saved.
Financial Repression: A Sheep Shearing Instruction Manual
Overview
"Financial Repression" is currently a hot buzzword in the global economic community, and its effects are even worse than it sounds. Like other recent economic buzzwords such as "monetary sterilization" and "quantitative easing", the average person will never understand the meaning, if they hear the phrase at all. That is too bad, because governments around the world deliberately and methodically stripping wealth (and therefore security and retirement lifestyle) from hundreds of millions of people is the quite explicit objective of Financial Repression.
As published in a recent working paper on the IMF website, Financial Repression is what the US and the rest of the advanced economies used to pay down enormous government debts the last time around, with a reduction in the government debt to GDP ratio of roughly 70% between 1945 and 1980. Financial Repression offers a third way out - as it allows governments to pay down huge debt burdens without either 1) default or 2) hyperinflation. If you are a senior government official of a nation that has a huge "sovereign debt" problem – like the United States and almost all of Europe, and you want to stay in power - this proven method is a topic of keen interest.
To understand this miraculous debt cure for governments, you need to understand the source of the funding. As we will explore in this article, the essence of Financial Repression is using a combination of inflation and government control of interest rates in an environment of capital controls to confiscate the value of the savings of the world's savers. Rephrased in less academic terms - the government deliberately destroys the value of money over time, and uses regulations to force a negative rate of return onto investors in inflation-adjusted terms, so that the real wealth of savers shrinks by an average of 3-4% per year (in the postwar historical example), and it uses an assortment of carrots and sticks to make sure investors have no choice but to accept having the purchasing power of their investments shrink each year.
What the IMF-distributed paper really constitutes is a Sheep Shearing Instruction Manual. The "way out" for governments is effectively to put the world's savers and investors in pens, hold them down, and shear them over and over again, year after year. Uninformed and helpless victims is what makes Financial Repression work, and it worked very well indeed for 35 years. On the other hand, if you understand what is truly going on, then you do have the ability to turn this to your substantial personal financial advantage. With a genuinely out of the box approach to long-term investment, the more heavy handed the repression - the more reliable the wealth compounding for those who reject flock thinking.
Understanding Financial Repression
Pimco (Pacific Investment Management Co.), one of the largest investment managers in the world, released their three to five year outlook last month, and their CEO predicted that increasing debt problems would lead to higher inflation and a return to "financial repression" in the United States.
Earlier in May, the Economist magazine had published an article on Financial Repression that included the following summary:
"... political leaders may have a strong incentive to pursue it (Financial Repression). Rapid growth seems out of the question for many struggling advanced economies, austerity and high inflation are extremely unpopular, and leaders are clearly reluctant to talk about major defaults. It would be very interesting if debt (rather than financial crisis or growing inequality) was the force that led to the return of the more managed economic world of the postwar period."
The phrase "Financial Repression" was first coined by Shaw and McKinnon in works published in 1973, and it described the dominant financial model used by the world's advanced economies between 1945 and around 1980. While academic works have continued to be published over the years, the phrase fell into obscurity as financial systems liberalized on a global basis, and former comprehensive sets of national financial controls receded into history.
However, since the financial crisis hit hard in 2008, there has been a resurgence of interest in how governments have paid down massive debt burdens in the past, and a fascinating study of Financial Repression, "The Liquidation of Government Debt", authored by Carmen Reinhart and M. Belen Sbrancia, was published by the National Bureau of Economic Research in March, 2011 (link below).
http://www.imf.org/external/np/seminars/eng/2011/res2/pdf/crbs.pdf
The paper is being circulated through the International Monetary Fund, and to understand why it is catching the full attention of global investment firms and governmental policymakers, take a look at the graph below:
The advanced Western economies of the world emerged from the desperate struggle for survival that was World War II, with a total stated debt burden relative to their economies that was roughly equal to that seen today. The governments didn't default on those staggering debts, nor did they resort to hyperinflation, but they did nonetheless drop their debt burdens relative to GDP by about 70% over the next three decades - and the very deliberate, calculated use of Financial Repression was how it was done.
The Mechanics Of Financial Repression
The specifics of financial repression took somewhat different forms in each of the advanced economies, but they shared four characteristics: 1) inflation; 2) governmental control of interest rates to guarantee negative real rates of return; 3) compulsory funding of government debt by financial institutions; and 4) capital controls.
1) Inflation. First and foremost, a government that owes too much money destroys the value of those debts through destroying the value of the national currency itself. It doesn't get any more traditional than that from a long-term, historical perspective. Without inflation, Financial Repression just doesn't work. Historically, the rate does not have to be high so long as the government is patient, but the higher the rate of inflation, the more effective financial repression is at quickly reducing a nation's debt problem.
For example, per the Reinhart and Sbrancia paper, the US and UK used the combination of inflation and Financial Repression to reduce their debts by an average of 3-4% of GDP per year, while Australia and Italy used higher inflation rates in combination with Financial Repression to more swiftly drop their outstanding debt by about 5% per year in GDP terms. As the crisis is much worse this time around, a substantially higher rate of inflation than that experienced in the 1945 to 1980 period is going to be necessary.
2) Negative Real Interest Rates. In a theoretical world, some would say that governments can't inflate away debts because the free market would demand interest rates that compensate them for the higher rate of inflation. Sadly, this theoretical world has little to do with the past or present real world.
In the past (and all too likely in the future), there were formal government regulations that determined the maximum interest rates that could be paid. As an example, Regulation Q was used in the United States to prevent the payment of interest on checking accounts, and to put a cap on the payment of interest on savings accounts.
Regulation Q is long gone, but government control of short term interest rates has been near absolute over the last decade in the United States. As described in detail in my article linked below, "Cheating Investors As Official Government Policy", the Federal Reserve has been openly using its powers to massively manipulate interest rates in the US, keeping costs low for the government while cheating tens of millions of investors.
http://danielamerman.com/articles/2011/Cheating.htm
So long as the Federal Reserve keeps control, there is no need for explicit interest rate controls. However, should the Fed begin to lose control, there is a strong possibility that interest rate controls will return to the US financial landscape, with similar regulatory controls being re-imposed in other nations.
3) Involuntary Funding. With this popular component of Financial Repression, the government establishes reserve or "quality" requirements for financial institutions that make holding substantial amounts of government debt mandatory - or at least establish overwhelming incentives for financial institutions such as banks, savings and loans, credit unions and insurance companies to do so. Of course, this is publicly phrased as "mandating financial safety", instead of the more accurate description of mandating the making of investments at below market interest rates to help overextended governments recover from financial difficulties.
This involuntary funding is sometimes described as a hidden tax on financial institutions, but let me suggest that this perspective misses the important part for you and me. Because all financial institutions operating within a country are required to effectively subsidize this liquidation of government debt by accepting less than the rate of inflation on interest rates, the gross revenues of all financial institutions are depressed, and therefore less money can be offered to depositors and policyholders. Because financial institutions make their money not on gross revenues, but on the spread between what they pay out and take in, then arguably, financial institution profits are not necessarily reduced, rather the guaranteed annual loss in purchasing power is passed straight through to depositors and policyholders, i.e. you and me.
As an example, if a fair inflation-adjusted return were 8%, and the spread kept by the financial institution was 2%, then we as investors would get 6%. If financial institutions, through involuntary funding, are uniformly forced to accept a 3% return on the government debt that must constitute a big portion of their portfolios, then they still keep 2%, but only pass through 1%. So the financial institution keeps 2% either way, and we as savers are the ones who ultimately pay this "hidden tax" in full, by getting a repressed 1% instead of a fair market 6% return.
4) Capital Controls. In addition to ongoing inflation that destroys the value of everyone's savings and thereby the value of the government's debts, while simultaneously making sure that interest rate levels lock in inflation-adjusted investor losses on a reliable basis, there is another necessary ingredient to Financial Repression: participation must be mandatory. Or as Reinhart and Sbrancia phrase it in their description / recipe for Financial Repression, it requires the "creation and maintenance of a captive domestic audience" (underline mine).
The government has to make sure that it has controls in place that will keep the savers in place while the purchasing power of their savings is systematically and deliberately destroyed. This can take the form of explicit capital and exchange controls, but there are numerous other, more subtle methods that can be used to essentially achieve the same results, particularly when used in combination. This can be achieved through a combined structure of tax and regulatory incentives for institutions and individuals to keep their investments "domestic" and in the proper categories for manipulation, as well as punitive tax and regulatory treatment of those attempting to escape the repression. A carrot and stick approach in other words, to make sure behavior is controlled.
A Sheep Shearing Instruction Manual
Only a tiny fraction of 1% of the world's population will ever read the original paper on the IMF website, or detailed analyses thereof. This is dry and boring stuff when compared to dancing or singing with the stars! Of course, there are many millions of investors who do read daily or weekly about what is going on in the financial world - but they and the journalists and bloggers who inform them usually just follow the ever changing surface of the markets. Again, the academic papers involved are so dry, boring and fundamental as to seem to have little relevance for the practical matter of what actions to take today or this month.
That said, let me suggest that few things are more important for your financial future than understanding and taking to heart Financial Repression. Because understanding Financial Repression means pulling the curtain aside and looking into the inner core of financial reality. It means understanding that much of what you have read and been taught about investment markets and long term investments over the last several decades has effectively been a sham.
Investor returns are not - and arguably never have been - fully about people compounding wealth in free markets, with the collective wisdom of the markets guaranteeing returns that are based upon rational assessments of the risk. Rather, investments, investment markets, investor returns and investor behavior have always been matters of governmental policy; what has varied over the years has been the form of government policy and how overt the control is.
To fully understand Financial Repression, you need to understand that the Reinhart and Sbrancia paper is effectively a sheep shearing manual. You and I, along with the rest of the savers and investors of the world are the sheep, and the goal of Financial Repression is to shear as much savings from us as the governments can, year after year, without triggering excessive unrest, and while keeping us producing the resources that can be politically redistributed.
The governments of the world are in trouble, and they would prefer to avoid overt global defaults, hyperinflation, or comprehensive austerity coupled with massive tax hikes. Each of those routes is highly unpopular, and could lead to political turmoil that would remove the decision makers and the special interests who support them from power. A more overt "managed economy" sounds much more attractive if you are in power, particularly since it has worked before over a period of decades, with an almost boring lack of political turmoil.
To get out of trouble, the governments have to wipe out most of the value of their debts, without raising taxes to the degree needed to pay the debts off at fair value. In other words, they need to cheat the investors. There is nothing accidental going on here, all that is in question are the particulars of the strategies for cheating the investors, meaning the collective savers of the world. Again, the time-honored and traditional form that governments who incur too much debt use in cheating the investors is to devalue the currency. Create enough inflation, and tax collections will rise with inflation but the debts won't, and the savers of the world will be paid back in full with currency that is worth much less than what was lent to the governments in the first place.
Except that there is the technicality that in theory, interest rates will rise above the rate of inflation, so that the value of savings is not eroded. From the governmental perspective, this is demonstrably a rather absurd theory. The core point of the Reinhart and Sbrancia paper is that the advanced economies of the world quite effectively squeezed an average of 3-4% annually of the value of government debt out of investor real net worth for a period of 35 years, using a wide assortment of overt and less overt controls over interest rates and investor behavior. Today the mechanism is different in that the central banks are using massive monetary creation in combination with their regulatory powers over major banks to control interest rates. However, the bottom line is that interest rates are absurdly low compared to the inflation and default risks, and this is because of near complete government control.
One potential sheep shearing problem is that only a minority of us "sheep" directly own government debt. For maximum sheep shearing efficiency, all of us who lead productive lives and produce more than we consume (meaning we generate savings) need to be sheared - and sheared often - whether we buy government bonds or not. This next step is one of the hardest parts for non-financial professionals to understand, but through manipulations of capital requirements and the creation of regulatory incentives and disincentives (that never make the nonfinancial media) governments can effectively control the investment behavior of financial institutions, and force the institutions to take on investments that pay less than the rate of inflation. From which the institutions still take their cut, and then pass through a still lower real return to their depositors and policyholders. So wherever we put our money, in whatever financial institution - we get absurdly low rates of return that help the governments reduce the real value of their debts.
So we're getting sheared, we've got no choice about it, the government explicitly plans to keep on shearing us for every remaining year of our lives, and wherever we go in the meadow, we still get sheared. This leads to the more savvy of us sheep trying to escape the meadow, and again, this is anticipated in the Financial Repression structure right from the beginning, with the construction of capital control fences. Many of the controls on savings leaving the country have been loosened since 1980. However, these controls have been returning since 2008, and are just likely to grow stronger as the return to full-on Financial Repression likely grows more overt.
Leaving The Flock
There is a way to beat Financial Repression. How? Succinctly phrased: the first step is to stop thinking like a sheep and start thinking like a shepherd. Stop acting like a sheep, and change your financial profile so that it aligns with the objectives of the "shepherds", the governments of the world.
Instead of fighting the governments of the world - position yourself so that the higher the rate of inflation and the greater the destruction of the value of money - the greater your real wealth grows, in inflation-adjusted terms.
The fundamentals of Financial Repression are for governments to pin down their citizens, force them to take interest rates that are below the government-induced rate of inflation, and make it almost impossible for an older investor with a conventional financial profile to escape. This is a time to fight the good fight politically - but not with your savings or your future standard of living.
Instead, align your financial interests with your government and the governments of the world. So that the more outrageous the government actions become in squeezing the value of investor savings from their populations - the more reliable the compounding of your wealth becomes for you, and the greater the growth in your financial security.
So how does one stop thinking and acting like a sheep? This can be amazingly simple, or it can be impossibly difficult. It is you and the way your mind works that will determine whether thinking like a shepherd will become simple or be impossible. How open are you - truly - to changing the way you view investments and financial security? Can you change the personal paradigm that may have shaped your worldview for decades?
View the investment world in the way in which we have all been programmed, and maintaining wealth over the coming years of inflation and Financial Repression is going to be extraordinarily difficult, particularly in after-tax and after-inflation terms. Because everything around you really is set up for sheep shearing. That's not a conspiracy theory - that is how the world really worked between 1945 and 1980, and policymakers around the world likely see variants of this proven debt reduction methodology as their only way out.
The Great Sheep Shearing of the early 21st century is already in process (we're just using some different names and methods this time around), and it will likely succeed with the overwhelming majority of investors - much like it did before, only on a more thorough basis, because the problems are far larger this time around. Whether Financial Repression will successfully prevent a meltdown is a different question, but regardless, the attempt is still likely to dominate markets as well as government regulations and policy.
Your alternative is to accept the world as it is, take personal responsibility for your own outcome, and educate yourself. You can seek to fundamentally change your paradigm, turn it upside down - and personally turn that same world of high inflation and Financial Repression into a target-rich environment of wealth building opportunities.
It is all up to you.
About the Author
Financial Consultant, CFA
Duluth MN USA
mail @ the-great-retirement-experiment.com
http://danielamerman.com/
Collapsing Clout of US Dollar
The Debt our US Congress and President's (Dems and Repubs) have amassed over the past few decades is going to be our demise unless strong medicine is provided. However I am not confident that the majority of citizens are willing to accept the required medicine to get well which could very well lead us down a path like Greece. Then again "We The People" did put these idiots in power via our votes. Unfortunately you get what you ask for sometimes and those that did not ask have to suffer right along with the majority that put them there.
Wednesday, June 15, 2011
Tuesday, June 14, 2011
US in Worse Shape Financially Than Greece
When adding in all of the money owed to cover future liabilities in entitlement programs the US is actually in worse financial shape than Greece and other debt-laden European countries, Pimco's Bill Gross told CNBC Monday.
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Much of the public focus is on the nation's public debt, which is $14.3 trillion. But that doesn't include money guaranteed for Medicare, Medicaid and Social Security, which comes to close to $50 trillion, according to government figures.
The government also is on the hook for other debts such as the programs related to the bailout of the financial system following the crisis of 2008 and 2009, government figures show.
Taken together, Gross puts the total at "nearly $100 trillion," that while perhaps a bit on the high side, places the country in a highly unenviable fiscal position that he said won't find a solution overnight.
"To think that we can reduce that within the space of a year or two is not a realistic assumption," Gross said in a live interview. "That's much more than Greece, that's much more than almost any other developed country. We've got a problem and we have to get after it quickly."
Gross spoke following a report that US banks were likely to scale back on their use of Treasurys as collateral against derivatives and other transactions. Bank heads say that move is likely to happen in August as Congress dithers over whether to raise the nation's debt ceiling, according to a report in the Financial Times.
The move reflects increasing concern from the financial community over whether the US is capable of a political solution to its burgeoning debt and deficit problems.
"We've always wondered who will buy Treasurys" after the Federal Reserve purchases the last of its $600 billion to end the second leg of its quantitative easing program later this month, Gross said. "It's certainly not Pimco and it's probably not the bond funds of the world."
Pimco, based in Newport Beach, Calif., manages more than $1.2 trillion in assets and runs the largest bond fund in the world.
Gross confirmed a report Friday that Pimco has marginally increased its Treasurys allotment—from 4 percent to 5 percent—but still has little interest in US debt and its low yields that are in place despite an ugly national balance sheet.
"Why wouldn't an investor buy Canada with a better balance sheet or Australia with a better balance sheet with interest rates at 1 or 2 or 3 percent higher?" he said. "It simply doesn't make any sense."
Should the debt problem in Greece explode into a full-blown crisis—an International Monetary Fund bailout has prevented a full-scale meltdown so far—Gross predicted that German debt, not that of the US, would be the safe-haven of choice for global investors.
More Reasons to Invest in Gold
With a supply shortage on top of the printing of US Dollars Gold is a good place to invest and one thing is for sure it will never be worth ZERO, which cannot be said of fiat currencies.
Gold to Reach $5,000 Due to Supply Shortage: Report
An exhaustive report by Standard Chartered predicts that gold [GCCV1
1525.80
1.40
(+0.09%)
] will more than triple to $5,000 an ounce because of a lack of supply, not just because of a surge in demand that most bullion bugs cite in their bullish calls.
“There are very few large gold mines set to commence operation in the next five years,” said Standard’s analyst Yan Chen in a report Monday. “The limited new supply comes at a time when central banks have turned from being net sellers to significant net buyers of gold. The result, in our view, will be a gold market in deficit, even assuming flat growth in demand. With the supply-demand balance so out of kilter, we see the gold price potentially going to US$5,000/oz.”
The London-based firm is among the first to focus on the supply-side of the gold equation amid the many bullish forecasts out there on the metal. After analyzing 345 gold mines and 30 copper/base metal gold mines around the globe, the team estimates annual gold production will be just 3.6 percent over the next five years.
“They make a pretty compelling argument, especially when it comes to mine supply,” said Brian Kelly, head of Brian Kelly Capital and a ‘Fast Money’ trader. “Most analysis focuses on demand from China and India, which of course can disappear as quickly as it materialized.”
But that’s unlikely to happen over the next five years as central banks look to further diversify their holdings of U.S. dollars and as emerging countries buy more gold in the aftermath of the global paper currency crisis.
“Currently, only 1.8 percent of China’s foreign exchange reserves is in gold,” wrote Chen and the Standard team in the 68-page report. “If the country were to bring this proportion in line with the global average of 11 percent, it would have to buy 6,000 more tonnes of gold, equivalent to more than 2 years of gold production.”
The bold call is among the most bullish out there. In a Bank of America/Merrill Lynch survey of global money managers released Tuesday, just about a third of money managers felt gold was overvalued. However, that is the highest reading in that survey in more than a year.
Standard Chartered recommends that clients buy shares of smaller gold miners to get the most upside from its prediction but also said clients could buy physical gold and gold exchange-traded funds.
Jim Rogers: The Next Recession Will Be Worse
If you do not know of this man you would benefit greatly by listening his views on economics and business.
Jim Rogers truly believes Federal Reserve Chairman Ben Bernanke will end quantitative easing, as planned, at the end of the month.
"(Bernanke) says he's going to stop QE2 ... I take him at his word since he's said it so many times," explains Rogers. If that seems like a backhanded compliment, it is. It's also the nicest thing Rogers said about either Bernanke or the Fed as a whole in our latest interview.
If there's any truth to the long held market cliche "don't fight the Fed," then Rogers is in for a world-class beat down. He seems utterly unable to stop brawling with the Fed. At the very least, Rogers rages at the Fed machine at every opportunity.
When Rogers visited Breakout in March, I made him "imaginary Fed chief" by virtue of the powers of Yahoo! Finance. It was the shortest imaginary reign in history as Rogers made shutting the Federal Reserve the top item on his agenda. Today, the man is harder-lined on the subject than ever, based on our interviews. He says you should reject everything you know or are told about the Fed, starting with the idea that the job of Fed chairman is an apolitical role. All Fed chairmen are political stooges, says Rogers, and Bernanke is no different. And as we move closer to November 2012, he says "there's enormous pressure to get Obama re-elected ... Bernanke knows where his bread is buttered."
Rogers dismisses Dr. Ben as "just an Ivy League professor" who has never been right. According to Rogers, Bernanke has been out of ideas since arriving in Washington -- and that's a good thing, because what the Fed and Bernanke have done so far has sent us down a path that the economy might never recover from. The stimulus from two rounds of quantitative easing are only the most recent and public, and have been likened to giving a drunk more booze to avoid a hangover, according to Rogers and many trading
Saturday, June 4, 2011
Economic Data Falls off Cliff
More information the Fed will probably use to create QE3. What do you think?
Horror for US Economy as Data Falls off Cliff
The last month has been a horror show for the U.S. economy, with economic data falling off a cliff, according to Mike Riddell, a fund manager at M&G Investments in London.
"It seems that almost every bit of data about the health of the US economy has disappointed expectations recently," said Riddell, in a note sent to CNBC on Wednesday.
"US house prices have fallen by more than 5 percent year on year, pending home sales have collapsed and existing home sales disappointed, the trend of improving jobless claims has arrested, first quarter GDP wasn’t revised upwards by the 0.4 percent forecast, durables goods orders shrank, manufacturing surveys from Philadelphia Fed, Richmond Fed and Chicago Fed were all very disappointing."
"And that’s just in the last week and a bit," said Riddell.
Pointing to the dramatic turnaround in the Citigroup "Economic Surprise Index" for the United States, Riddell said the tumble in a matter of months to negative from positive is almost as bad as the situation before the collapse of Lehman Brothers in 2008.
"The correlation between the economic surprise index and Treasury yields is very close, so the lesson is that whatever your long term macro views are regarding hyper inflation vs. deflation or the risk of the US defaulting, the reality is that if you want to have a view about government bond prices, the best thing you can do is look at the economic data to see what’s actually going on," said Riddell.
"And right now, the economic data is suggesting that however measly you may think a 3 percent yield is on a 10-year Treasury, the yield should probably be a fair bit lower given what’s going on in the US economy," said Riddell.
"You’ve also got to wonder at what point the markets for risky assets start noticing, too."
"QE3 anybody?" asks Riddell.
Wednesday, June 1, 2011
Double-Dip in Housing - Why is anyone surpised???
When you look at the whole state of the economy both in the US and abroad why would anyone expect anything but a further decline in the housing market? I believe we will see the decline continue for at least 3 more years in real terms. The only thing that would make the housing prices go up is inflation due to money printing by the Federal Reserve.
'Double-Dip' in Housing Prices Even Worse Than Expected
U.S. single-family home prices dropped in March, dipping below their 2009 low, as the housing market remained bogged down by inventory and weak demand, a closely watched survey said Tuesday.
"This month's report is marked by the confirmation of a double-dip in home prices across much of the nation," David Blitzer, chairman of the index committee at S&P Indices, said in a statement. "Home prices continue on their downward spiral with no relief in sight."
Though there had been hopes in the industry that prices were troughing and ready to turn higher, the latest trends show little hope in sight until later this year or early in 2012, he added.
Whispers of QE3
More talk of QE3 today.
Third Time's a Charm? Whispers of QE3 Emerge
"The U.S. economy is hitting the brakes at exactly the wrong time for the Federal Reserve," said Douglas Borthwick, managing director at Faros Trading in Stamford, Connecticut.
"With the expected end of QE2 within reach, the U.S. economy is in a situation where its only form of life support is about to be ripped away from it."
They also fear the unknown. No matter how much confidence they publicly express about their ability to withdraw the unprecedented monetary stimulus provided during the crisis, many have expressed trepidation about the size of the central bank's balance sheet, now a record $2.76 trillion.
The latest one-two punch came from reports on Wednesday showing both a sharp deceleration in private sector hiring and a slowdown in manufacturing.
Most Fed watchers still see a third round of quantitative easing, or QE3, as a very remote possibility. The obstacles this time around are greater, since inflation has been creeping higher and the jobless rate, while still at an elevated 9 percent, has come down quite a bit in recent months.
Slowing Economy - Who Knew? Rumors of QE3!
Go here for a video on the weak economy --> http://www.cnbc.com/id/43236764
Looks like the Fed will continue to pump money into the market in order to re-inflate the stock market.