Monday, September 17, 2012

Today's links

1--How Much Does the Fed’s Plan Really Help Main Street?, NYT

2--QE Won't Work Because There's No Demand For Credit, business insider

3--Investor euphoria as Federal Reserve launches QE3 risks turning sour, Project Syndicate

4--Is QE3 Yet Another Stealth Bank Bailout?, naked capitalism

5--Eugene Linden: In a World of Underpriced Risk, What Could Possibly Go Wrong?, naked capitalism

An IMF study of 124 banking crises concluded that regulatory forbearance, the term of art for letting impaired banks soldier on, found:

The typical result of forbearance is a deeper hole in the net worth of banks, crippling tax burdens to finance bank bailouts, and even more severe credit supply contraction and economic decline than would have occurred... Also, the tiny margins at the zero bound mean that the short-term collateralized lending that supports money market funds and much of the shadow banking system can become unprofitable in the blink of an eye. Thus, ultralow rates, historically associated with the risk of inflation, can actually withdraw liquidity from the market, and produce a deflationary spiral.

6--Richard Koo explains why Fed is impotent, bloomberg

7--Cargill and Others Behind anti-Organic "Stanford Study", naked capitalism

8--HUSSMAN: Market Conditions Have Hit The Single Worst Point That We Have Ever Observed, business insider

9--Email From Lead Analyst, Weekly Petroleum Supply Team on Possibility of Recession, Mish

10--The effects of QE (chart), Big Picture

11--Slumping Durable Goods Orders & QE3, Big Picture

12--The Fed will be buying MBS at some of the richest valuations in recent history, sober look

13--Those pesky inflation surprises, sober look

Inflationary pressures, particularly food inflation, continue to percolate across some emerging markets nations. Central bankers don't like openly discussing the problem, fearing just talking about it could raise inflation expectations. But that does not make the problem any less real.

14--QE to prevent deflation?, econbrowser

I would judge QE3 to be a success if it resulted in lower real interest rates and higher expectations of inflation, both of which would slightly encourage additional spending today.
... think the correct interpretation of QE3 is that the Fed has unambiguously signaled that it's not going to re-run the Japanese experiment to see what happens when the central bank stands by and watches wages and prices fall even while unemployment remains very high. The Fed can and will keep U.S. inflation from falling much below 2%, and that may help a little. Investors should expect that, and not a whole lot more.

15--Economists Are Uncertain More Fed Moves Will Work, WSJ

16--After Fed yield moves to the fore, WSJ

17--Bernanke unbounded, WSJ

18--Fed's massive print run disguises deficit, WSJ

19--Latest moves by Fed and European Central Bank--Financial parasitism and looting are the “new normal”, WSWS


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