R-bloggers

2012-09-14

QE3 and ESM

Well, this week has been packed with "good" news. I say "good" because we can always see the negative consequences of policy decisions. Yet in this case, I hope the positive out weighs the negative.

QE3 will be underway. The Fed announced Thursday that the long-awaited and expected quantitative easing. Fed plans on $40 billion in open-ended purchases of mortgage backed securities. Three rounds of super open market operations. On the same day it was reported that initial claims data rose 15,000 to 382,000.

So in other words, cheap money (borrowing from the future at zero percent fed funds rate) and razor thin yields. I guess if anyone wants any sort of respectable return will purchase junk bonds (Invest in Egypt!).

I can't help but notice that most of the economic policy makers have studied extensively the Japanese crisis from the last decade. Of course, they popooed the actions of the Japanese Central Bank. I guess that is how the world turns.

In other news, the German Federal Constitutional Court ruled in favor of the rescue facility (ESM). Yet required that Germany retain some control. Meanwhile, Germany objected to the European Commission's proposal to grant the European Central Bank supervisory power over all eurozone banks.

We certainly live in crazy times...

Here is a Yahoo's economic calendar:
Economic Calendar

1 comment:

  1. I also forgot to mention a slight personal interpretation. With the market flooded with dollars, we can probably see a deprecation of USD versus the other major currencies causing net exports to rise and a further secondary jolt to the economy!

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