Tracking the Fed bond buying spree 2 !!!

[the white rabbit]

Is this there first buy of 150B announced ? 11:09 am - Fed- Up: Fed buys $2.55B treasuries of $20.949B submitted, primarily in the 2014 to 2015 range. The amount was what was expected ($2 bln to $3 bln) and should be about the same amount for each scheduled operation http://finance.yahoo.com/bonds/market_summary/article/200001/bond_ticker

[the white rabbit]

The United States is running out of time to get its budget and trade deficits under control. Despite the urgency of the situation, 2010 has been wasted in hype about a non-existent recovery. As recently as August 2 Treasury Secretary Timothy F. Geithner penned a New York Times column, “Welcome to the Recovery.�




Without a revolution, Americans are history.

As John Williams (shadowstats.com) has made clear on many occasions, an appearance of recovery was created by over-counting employment and undercounting inflation. Warnings by Williams, Gerald Celente, and myself have gone unheeded, but our warnings recently had echoes from Boston University professor Laurence Kotlikoff and from David Stockman, who excoriated the Republican Party for becoming big-spending Democrats.

It is encouraging to see some realization that, this time, Washington cannot spend the economy out of recession. The deficits are already too large for the dollar to survive as reserve currency, and deficit spending cannot put Americans back to work in jobs that have been moved offshore.

However, the solutions offered by those who are beginning to recognize that there is a problem are discouraging. Kotlikoff thinks the solution is savage Social Security and Medicare cuts or equally savage tax increases or hyperinflation to destroy the vast debts.

Perhaps economists lack imagination, or perhaps they don’t want to be cut off from Wall Street and corporate subsidies, but Social Security and Medicare are insufficient at their present levels, especially considering the erosion of private pensions by the dot com, derivative and real estate bubbles. Cuts in Social Security and Medicare, for which people have paid 15 per cent of their earnings all their lives, would result in starvation and deaths from curable diseases.

Tax increases make even less sense. It is widely acknowledged that the majority of households cannot survive on one job. Both husband and wife work and often one of the partners has two jobs in order to make ends meet. Raising taxes makes it harder to make ends meet–thus more foreclosures, more food stamps, more homelessness. What kind of economist or humane person thinks this is a solution?

Ah, but we will tax the rich. The rich have enough money. They will simply stop earning.

Let’s get real. Here is what the government is likely to do. Once Washington realize that the dollar is at risk and that they can no longer finance their wars by borrowing abroad, the government will either levy a tax on private pensions on the grounds that the pensions have accumulated tax-deferred, or the government will require pension fund managers to purchase Treasury debt with our pensions. This will buy the government a bit more time while pension accounts are loaded up with worthless paper.

The last Bush budget deficit (2008) was in the $400-500 billion range, about the size of the Chinese, Japanese, and OPEC trade surpluses with the US. Traditionally, these trade surpluses have been recycled to the US and finance the federal budget deficit. In 2009 and 2010 the federal deficit jumped to $1,400 billion, a back-to-back trillion dollar increase. There are not sufficient trade surpluses to finance a deficit this large. From where comes the money?

The answer is from individuals fleeing the stock market into “safe� Treasury bonds and from the bankster bailout, not so much the TARP money as the Federal Reserve’s exchange of bank reserves for questionable financial paper such as subprime derivatives. The banks used their excess reserves to purchase Treasury debt.

These financing maneuvers are one-time tricks. Once people have fled stocks, that movement into Treasuries is over. The opposition to the bankster bailout likely precludes another. So where does the money come from the next time?

The Treasury was able to unload a lot of debt thanks to “the Greek crisis,� which the New York banksters and hedge funds multiplied into “the euro crisis.� The financial press served as a financing arm for the US Treasury by creating panic about European debt and the euro. Central banks and individuals who had taken refuge from the dollar in euros were panicked out of their euros, and they rushed into dollars by purchasing US Treasury debt.

A d v e r t i s e m e n t
This movement from euros to dollars weakened the alternative reserve currency to the dollar, halted the dollar’s decline, and financed the US budget deficit a while longer.

Possibly the game can be replayed with Spanish debt, Irish debt, and whatever unlucky country is eswept in by the thoughtless expansion of the European Union.

But when no countries remain that can be destabilized by Wall Street investment banksters and hedge funds, what then finances the US budget deficit?

The only remaining financier is the Federal Reserve. When Treasury bonds brought to auction do not sell, the Federal Reserve must purchase them. The Federal Reserve purchases the bonds by creating new demand deposits, or checking accounts, for the Treasury. As the Treasury spends the proceeds of the new debt sales, the US money supply expands by the amount of the Federal Reserve’s purchase of Treasury debt.

Do goods and services expand by the same amount? Imports will increase as US jobs have been offshored and given to foreigners, thus worsening the trade deficit. When the Federal Reserve purchases the Treasury’s new debt issues, the money supply will increase by more than the supply of domestically produced goods and services. Prices are likely to rise.

How high will they rise? The longer money is created in order that government can pay its bills, the more likely hyperinflation will be the result.

The economy has not recovered. By the end of this year it will be obvious that the collapsing economy means a larger than $1.4 trillion budget deficit to finance. Will it be $2 trillion? Higher?

Whatever the size, the rest of the world will see that the dollar is being printed in such quantities that it cannot serve as reserve currency. At that point wholesale dumping of dollars will result as foreign central banks try to unload a worthless currency.

Fresh food that lasts from eFoods Direct (Ad)

The collapse of the dollar will drive up the prices of imports and offshored goods on which Americans are dependent. Wal-Mart shoppers will think they have mistakenly gone into Neiman Marcus.

Domestic prices will also explode as a growing money supply chases the supply of goods and services still made in America by Americans.

The dollar as reserve currency cannot survive the conflagration. When the dollar goes the US cannot finance its trade deficit. Therefore, imports will fall sharply, thus adding to domestic inflation and, as the US is energy import-dependent, there will be transportation disruptions that will disrupt work and grocery store deliveries.

Panic will be the order of the day.

Will farms will be raided? Will those trapped in cities resort to riots and looting?

Is this the likely future that “our� government and “our patriotic� corporations have created for us?

To borrow from Lenin, “What can be done?�

Here is what can be done. The wars, which benefit no one but the military-security complex and Israel’s territorial expansion, can be immediately ended. This would reduce the US budget deficit by hundreds of billions of dollars per year. More hundreds of billions of dollars could be saved by cutting the rest of the military budget which, in its present size, exceeds the budgets of all the serious military powers on earth combined.

US military spending reflects the unaffordable and unattainable crazed neoconservative goal of US Empire and world hegemony. What fool in Washington thinks that China is going to finance US hegemony over China?

The only way that the US will again have an economy is by bringing back the offshored jobs. The loss of these jobs impoverished Americans while producing oversized gains for Wall Street, shareholders, and corporate executives. These jobs can be brought home where they belong by taxing corporations according to where value is added to their product. If value is added to their goods and services in China, corporations would have a high tax rate. If value is added to their goods and services in the US, corporations would have a low tax rate.

This change in corporate taxation would offset the cheap foreign labor that has sucked jobs out of America, and it would rebuild the ladders of upward mobility that made America an opportunity society.

If the wars are not immediately stopped and the jobs brought back to America, the US is relegated to the trash bin of history.

Obviously, the corporations and Wall Street would use their financial power and campaign contributions to block any legislation that would reduce short-term earnings and bonuses by bringing jobs back to America. Americans have no greater enemies than Wall Street and the corporations and their prostitutes in Congress and the White House.

The neocons allied with Israel, who control both parties and much of the media, are strung out on the ecstasy of Empire.

The United States and the welfare of its 300 million people cannot be restored unless the neocons, Wall Street, the corporations, and their servile slaves in Congress and the White House can be defeated.

Without a revolution, Americans are history.

http://www.infowars.com/the-ecstasy-of-empire/

[the white rabbit]

One of the most beloved phenomena of Fed intervention is the "miraculous" ramp in stocks on days in which the Fed's Permanent Open Market Operations (POMO) occurred: while this was a requisite in 2009 when the Fed monetized $700 billion in Treasurys, it had gradually disappeared from the public consciousness after the termination of the Treasury portion of QE1 in October 2009. Well, now that POMO is back courtesy of QE Lite, and with the help of various sellside analysts, Primary Dealers knew precisely which Treasury CUSIPs to purchase in advance of the auction for a quick leveraged pick up of a few hundred bps. And now that the money is funded back to the PDs, as of the end of the POMO operation at 11am Eastern, it needs to find a new home. And with the PDs providing the initial impetus for a risk asset (read stock) ramp, and momo quants picking up the sloppy seconds as they jump over each other to send the momentum driven ramp ever higher, the result is presented below. What this means is that going forward, every single day that the Fed is monetizing bonds via 10:15-11:00am POMOs, it will be very foolhardy to short into the Fed's stock surging offensive. As a reminder, here are the immediately upcoming POMO days through the end of August: August 19, August 24, August 26, and September 1. Shorting on those days has once again become implicitly illegal. http://www.zerohedge.com/

[Gknowmx]

Apparently China isn't buying it:

http://www.bloomberg.com/news/2010-08-17/china-cuts-long-term-treasury-holdings-by-most-ever-as-u-s-yields-decline.html

[madfranks]

I heard rumors of more QE but didn't know it would start so soon! Thanks white rabbit for this thread, the original back on the ol' forum was one of the best there.

Any word on how much money they're planning to print this time? What was it, $300 billion last time?

[madfranks]

From the link in the OP:

11:13 am - QE2: The Fed's program of bond buying, recycling maturing agency and mortgage-backeds into treasuries, today buying $2.55 bln of the $20.95 bln submitted in the 2014 to 2016 is being viewed as "quantitative easing." Sort of. At this juncture they are just shifting the deck chairs, rolling the mortgage related issues into bonds, but many see further outright buying down the pike. There is a definite possibility that they will expand on the program, much as many of the previous schemes hatched to bailout the economy have been, but they will not be pulling the trigger unless their hand is forced. The initial plan was to concentrate primarily in the 2-10-yr durations which saw the 30-yr underperform. Once they released the "Tentative Outright Treasury Operation" schedule, however, they included 2 programs that extended to buying bonds in the 2021 to 2040 range and TIPS in the 2011 to 2040 space and the long bond was given a boost and continues to outperform as players reach for yield and safety out the curve.

[the white rabbit]

For the Aug 19 Operation 1 - RESULTS
Operation Date: 08/19/2010

Operation Type: Outright Coupon Purchase

Release Time: 10:15 AM

Close Time: 11:00 AM

Settlement Date: 08/20/2010

Maturity/Call Date Range: 08/15/2016 - 08/15/2020


Total Par Amt Accepted (mlns) : $3,609

Total Par Amt Submitted (mlns) : $21,893

[the white rabbit]

Today Operation Date: 08/24/2010

Operation Type: Outright Coupon Purchase

Release Time: 10:15 AM

Close Time: 11:00 AM

Settlement Date: 08/25/2010

Maturity/Call Date Range: 02/15/2013 - 07/31/2014


Total Par Amt Accepted (mlns) : $1,350

Total Par Amt Submitted (mlns) : $17,285

[the white rabbit]

In one week the Fed has spent 7.5B on bonds of the announced 150B. Thats gives them 5 months at that rate; Bringing us to Jan 24 2011.

[madfranks]

In one week the Fed has spent 7.5B on bonds of the announced 150B. Thats gives them 5 months at that rate; Bringing us to Jan 24 2011.


Did they really announce $150B as their limit this time? Last I read they didn't have a limit but promised it wouldn't be too much.

[the white rabbit]

Operation Date: 08/26/2010

Operation Type: Outright Coupon Purchase

Release Time: 10:15 AM

Close Time: 11:00 AM

Settlement Date: 08/27/2010

Maturity/Call Date Range: 02/15/2021 - 08/15/2040


Total Par Amt Accepted (mlns) : $1,415

Total Par Amt Submitted (mlns) : $8,455

http://www.newyorkfed.org/markets/pomo/display/index.cfm

9B to date

[the white rabbit]

August 30, 2010 August 31, 2010 Outright TIPS Purchase 1/15/2011 – 2/15/2040

September 1, 2010 September 2, 2010 Outright Treasury Coupon Purchase 2/15/2012 – 1/31/2013

September 7, 2010 September 8, 2010 Outright Treasury Coupon Purchase 8/15/2014 – 7/31/2016

September 9, 2010 September 10, 2010 Outright Treasury Coupon Purchase 2/15/2013 – 7/31/2014

September 13, 2010 September 14, 2010 Outright Treasury Coupon Purchase 8/15/2016 – 8/15/2020


http://www.newyorkfed.org/markets/tot_operation_schedule.html

[the white rabbit]

Aug 30 and today the Fed has added 1.2B in total.Bringing the spree to 10.2B spent to date.

[the white rabbit]

Operation Date: 09/07/2010

Operation Type: Outright Coupon Purchase

Release Time: 10:15 AM

Close Time: 11:00 AM

Settlement Date: 09/08/2010

Maturity/Call Date Range: 08/15/2014 - 07/31/2016


Total Par Amt Accepted (mlns) : $2,708

Total Par Amt Submitted (mlns) : $15,646



Bringing Benny's total to date to a lucky 13B spent !!!!

[gunDriller]

Operation Date: 08/26/2010

Operation Type: Outright Coupon Purchase

Release Time: 10:15 AM

Close Time: 11:00 AM

Settlement Date: 08/27/2010

Maturity/Call Date Range: 02/15/2021 - 08/15/2040


Total Par Amt Accepted (mlns) : $1,415

Total Par Amt Submitted (mlns) : $8,455

http://www.newyorkfed.org/markets/pomo/display/index.cfm

9B to date


can you explain what this means ?

i get the basic impression, the government is creating new debt at the rate of about $2 Trillion in 2010, and rolling over existing debt of about $12 Trillion at the end of the Bush admin, so they end up doing $5 to $7 Trillion worth of bond auctions every year - at a rate of about $120 a week.

but i still don't know how to tell if the auctions are going well. i read analyses, it sounds like the US gov. is not selling all their bonds so they are creating Mega-Cockamamie type stories about using "proceeds from sale of Mortgage backed Securities to buy debt".

but it's hard for me to do the sleuthing like White Rabbit & Magnes are doing.

[the white rabbit]

Fed's Move to Buy Treasurys Posing Serious Risks: Mishkin
The Federal Reserve's decision last month to step up its buying of Treasury securities could be laying the groundwork for inflation and a host of other political and economic troubles, former Fed governor Frederic Mishkin told CNBC.


CNBC.com
Frederic Mishkin
--------------------------------------------------------------------------------


In a rare public dissent with the central bank, Mishkin, a professor at Columbia Business School who left the central bank in 2008, called the Fed's move to use receipts from maturing mortgage-backed securities to buy more Treasurys "one of the most important decisions the Fed has made in a very long time."

The purchases of long-term government debt�expected to total about half a trillion dollars�should be accompanied by an exit strategy, he said.

"When you hold a lot of long-term debt on your balance sheet, you're now exposed to a lot of interest rate risks," Mishkin said in a live interview. "All of a sudden you could be booking losses. Think about the screams in Congress about all of this."

The Fed decision at its Open Market Committee meeting stunned the financial markets, but at the time investor reaction was interpreted as worry over the central bank not doing enough.


RELATED LINKS
Current DateTime: 08:38:25 08 Sep 2010
LinksList Documentid: 39056742
It's Not the Economy, It's WashingtonFinding Faith in the Fed
Chairman Ben Bernanke, at a subsequent speech during the central bank's Jackson Hole, Wyo., summit later in the month, temporarily assuaged markets with assurance that the Fed would be monitoring the economy closely and would step in when needed.

But Mishkin said the Fed's program to buy Treasurys is a risky move. While he stopped short of saying he would have voted against it if he was still an FOMC member, he called the move a "remarkable shift" in policy that is similar to the short-term outlook that fiscal and monetary policy is taking in Washington.



"It doesn't mean we should rule out large-scale asset purchases," he said. "It just means the threshold should be very high and if they're going to do it they better have a commitment to a long-run strategy to shrink that balance sheet."

He also defended the Fed's actions during the height of the financial crisis, but said the economy has changed and what worked then to avoid "something much, much worse" may not work now.

"The large-scale asset purchases, the expansion of the balance sheet, were exactly the right thing to do during the depths of the crisis. It's not as clear that they're as effective at this current juncture," Mishkin said. "My view is you better think of the long-run costs pretty damn hard and then ask are the benefits sufficient to pull the trigger."

© 2010 CNBC.com
http://www.cnbc.com/id/39056403

[the white rabbit]

Another 1.3B today good for 14.3B to date spent. http://www.newyorkfed.org/markets/pomo/display/index.cfm http://www.freakingnews.com/pictures/49500/House-of-Cards-49575.jpg

[the white rabbit]

The last one they said they would buy 18B . Now the next one is for 27B . SEE THE POP IN GOLD NOW YOU KNOW WHY Across all operations in the schedule listed below, the Desk plans to purchase approximately
$27 billion. This is the amount of principal payments from agency debt and agency MBS expected to be received between mid-September and mid-October. http://www.newyorkfed.org/markets/tot_operation_schedule.html THE Fed has spent 18B to date. WITH ANNOUNCED 27B it will be 45B in 2 months.

[gunDriller]

http://www.freakingnews.com/pictures/49500/House-of-Cards-49575.jpg

what is that multi-colored thing that's flying through the House of Cards ?

[the white rabbit]

A bag of garbage

[the white rabbit]

The Fed spent 4.2 B in the last 2 days propping up the market. On avg the Fed spends a Billion a day keeping the bond musicial chair game playing . Gold will moon shot better get yours the buck is toast !!!!

[the white rabbit]

My guest on Hedge Fund Radio this week is the legendary hedge fund manager Bill Fleckenstein, president of Fleckenstein Capital, based in Seattle, Washington.

Bill graduated from the University of Washington with a major in Mathematics, and joined the prestigious Wall Street firm Kidder Peabody in 1979. In 1982 he launched his own firm, following in the footsteps of the great hedge fund pioneers like George Soros, Julian Robertson, and Michael Steinhart.

He became a highly controversial figure during the nineties by warning of the dangers of the dotcom bubble. Bill stuck to his convictions and cashed in big time in the collapse that followed, riding some of his short positions down to zero.

Fleck, as he is known to his friends, was a vociferous critic of the Fed’s easy money policies during the 2000’s. He published a bestselling book, Greenspan’s Bubble: The Age of Ignorance at the Federal Reserve in January of 2008.

Fleck ran a short only hedge fund which he closed within days of the March 2009 bottom in the stock market, and returned the capital to his ecstatic investors.

Since then he has been predominantly long investments that are beneficiaries of the relentless running of the printing presses in Washington, such as gold and the Canadian dollar. He still keeps in his office a six foot high stuffed black bear, wearing a blue “Dow 10,000� baseball hat, given him by a client. Note to readers: Bill doesn’t play in the ETF space, but I have included the relevant stock symbols for the convenience of individual investors.

Bill is sitting a major position in gold (GLD) these days, both in the physical and through the major miners, Newmont Mining (NEM), Agnico Eagle (AEM), and Goldcorp (GG). Despite a fourfold return over the last decade, the barbarous relic is still hated by many professional money managers, which means it still has much further to rise. Falling confidence in “colored paper� (dollars) will just add fuel to the flames. Fleck is matching investments in the yellow metal with serious positions in silver and its miners. His target is nothing more specific than “UP�.

As much as Bill despises Treasury bonds (TBT), (TMV) at these nosebleed levels, he isn’t going short yet. He thinks we need to see a dollar crash first, and a recognition that we are in a stagflationary environment. Don’t waste time trying to call the top, because once the spike in interest rates starts, it will be “a big, big bear market,� that could go on for decades. The same currency/bond market tandem collapse logic may also apply to the yen and the JGB market. Rising commodity prices, like in copper (CU), are an indication that some real inflation is on the way.

Stocks generally are headed for a big multiple compression, but until then, are stuck in a wide trading range. One of his few long picks is Microsoft (MSFT) which has recovered from its disastrous Vista operating system launch, and is now hitting on all cylinders with a series of successful new product launches. MSFT is selling for only ten times earnings. Bill also likes Verizon (VZ), which has been running on the prospect of a big network deal for Apple’s (AAPL) I phone. Fleck hates banks because they are still depending on a bogus accounting system, but won’t short them because the government keeps rescuing them with arbitrary safety nets.

Regarding China, Bill is not in the China bubble camp, and likes emerging markets generally, but isn’t a specific investor. The Western world ruined its banking systems during the bubble, while emerging markets didn’t. The consequence is that they are booming and we aren’t.

On the currency front, Fleckenstein likes the Canadian dollar (FXC), and admires the Singapore dollar and the Norwegian kroner from afar. He also has some cash in the Chinese Yuan (CYB) because he thinks it has to appreciate at some point, but doesn’t know how long it will take to pay off.

To listen to my interview in full with Bill Fleckenstein on Hedge Fund Radio,
http://www.zerohedge.com/article/legendary-hedge-fund-manager-bill-fleckenstein-says-no-bond-crash-without-dollar-crash

[the white rabbit]

Holy shyt !!! The fed bought 5.2B on 24B put up. This is largest purchase since QE2 started. 27B spent to date !!!

[Gknowmx]

Holy shyt !!! The fed bought 5.2B on 24B put up. This is largest purchase since QE2 started. 27B spent to date !!!


Yeah, holey sheet is right. :o

[the white rabbit]

Another 2B today. 29B spent to date !! http://www.newyorkfed.org/markets/pomo/display/index.cfm?showmore=1&opertype=orig

[DMac]

Thanks for keeping up with this Rabbit!

[the white rabbit]

3.9B spent on 15.8B put up. 32.9B made from thin air for QE2 !!! Got gold :o :o :o

[the white rabbit]

http://theintelhub.com/2010/09/23/30-trillion-for-quantitative-easing-qe-2-its-time-to-get-radical/ $30 Trillion for Quantitative Easing (QE) 2? It’s Time to Get Radical!
September 23, 2010 by Alex
Filed under Economy, Featured, New World Order, U.S. News
5 Comments


Children playing with stacks of worthless money in Germany
By Chris Kitze
Commentary From the Publisher of Before It’s News

Yes, it’s time to get radical on the economy and no, I’m not talking about going full Karl Marx — the politicians in Washington appear well down THAT road.. The next set of bailouts could run $30 trillion (as I’ll explain in a bit) and that’s probably not the end of it because all the future government entitlements are well over $100 trillion. This is not only unaffordable, any attempt to make good on even a small portion of this is a fool’s errand. In addition to attempting an impossible task that is doomed to fail, we’re bailing out the wrong people! Hopefully, this article will get you thinking — feel free to leave a comment and help our discussion.

I’m talking about taking a serious detour from the way things have been done and proposing a radical restructuring of the way government and money work, as well as, a massive clean up of the mess we’ve gotten into. What I am proposing will completely eliminate the Federal debt, change the way government does business and end the banking cartel that destroys countries, finances war and and causes excessive consumer spending. It will completely change the role of the Federal government and restore liberty. It could be replicated wherever fiat money systems are in force in almost any country.
MORE ...

[Gknowmx]

3.9B spent on 15.8B put up. 32.9B made from thin air for QE2 !!! Got gold :o :o :o


No kidding. What a week.

[Quixote2]

http://www.zerohedge.com/article/why-qe2-qe-lite-may-mean-fed-will-purchase-almost-3-trillion-treasurys-and-set-stage-monetar

Snipped from article:

"We have conducted a rough analysis on how QE2 will reshape the Fed's balance sheet. We were stunned to realize that over the next 6 months the Fed may be the net buyer of nearly $3 trillion in Treasurys, an action which will likely set off a chain of events which could result in rates dropping all the way to zero, stocks surging, and gold (and other precious metals) going from current price levels to well in the 5 digit range. "

[Dogman]

I have noticed that this time around, the Fed has been conspicuously quiet about exactly how much they will print for QE 2. The first time around they were very vocal about not spending a dime over $300 bn, and they shouted it out that this would be their limit. This time I haven't heard a peep to how much they will print this time. The $3 trillion number may be why they're keeping it quiet.

The White Rabbit has an excellent thread here where he's posting the latest developments of QE 2.


Sounds like the term "Silence is Golden" is not a good thing. And can be scary.

[the white rabbit]

The Fed only came in today with a half billion. They must of spent the rest trying to get gold to close below 1300 . Mmmmmm I guess that back fired !!!!

[madfranks]

The Fed only came in today with a half billion. They must of spent the rest trying to get gold to close below 1300 . Mmmmmm I guess that back fired !!!!


Yeah no kidding; but since QE2 is effectively just beginning, we could see gold up hundreds of dollars more by the time they're done monetizing.

[madfranks]

The Fed Is Desperately Trying To Regain The Element Of Surprise (http://www.businessinsider.com/the-fed-is-desperately-trying-to-regain-the-elemant-of-surprise-as-everyone-is-taking-qeii-for-granted-2010-9)


The Fed may not announce a huge new round of QE at the November meeting, but rather a smaller, more open-ended program.

Mike O'Rourke of BTIG read this as the Fed trying to tamp down expectations, and regain some element of surprise in a market where big expectations are already baked in.

So that's why they're not telling anyone how much they are going to spend this time! They want to keep the upper hand, the "element of surprise". Yeah, that's exactly what this economy needs, more uncertainty.

[mike88]

meanwhile, in china. the Sentinal newspaper reports the bank of china 5 billion yuan bond sale had 5 times as many offers as bonds available. might be some benefits to having an economy that actually manufactures useful items. the export of war doesn't appear to be working so well. maybe the us could try this model of production and see if it will work.

[the white rabbit]

With 3 days left with Fed announced buy back. September 30, 2010 October 1, 2010 Outright Treasury Coupon Purchase 2/15/2021 – 8/15/2040

October 5, 2010 October 6, 2010 Outright Treasury Coupon Purchase 9/30/2016 – 8/15/2020

October 6, 2010 October 7, 2010 Outright Treasury Coupon Purchase 3/15/2013 – 8/31/2014
They said they would spend 27B . Across all operations in the schedule listed below, the Desk plans to purchase approximately
$27 billion. This is the amount of principal payments from agency debt and agency MBS expected to be received between mid-September and mid-October.

http://www.newyorkfed.org/markets/tot_operation_schedule.html They have spent only 19B of that. So for the next three buybacks they will dish out 8B.

[the white rabbit]

2.2B spent on 11.5B looking get flushed. I have around 36B spent to date . http://www.newyorkfed.org/markets/pomo/display/index.cfm

[bellevuebully]

Nice job Rabbit. Thanks.

[the white rabbit]

A $500 billion purchase of securities would provide about as much stimulus as a half-point to three-quarters point cut in the Fed's main interest-rate lever, called the federal funds rate, Dudley estimated.

Dudley downplayed concerns that even lower interest rates might fail to spur Americans to buy more.

"This is too dark a view," he said.

He argued that lower rates would help bolster the values of homes and stocks, which would support Americans' wealth and could make them feel better about spending more. Moreover, lower rates could lead more people to refinance their homes, which would leave them cash to spend on other things, he said.

But Richard Fisher, president of the Federal Reserve Bank of Dallas, was skeptical.

"Further quantitative easing might be pushing on a string," he said in a speech in Canada. "In the worst case, it could flood the engine of the economy with gas that might later ignite inflation." Fisher will become a voting of the policymaking group next year.

Meanwhile, James Bullard, president of the Federal Reserve Bank of St. Louis and a voting member of the Fed's main policymaking group, has suggested that the Fed initially buy a moderate amount of government bonds -- perhaps in the range of $100 billion or less. After that, the Fed would review the economic climate at each meeting and decide whether it needs to buy more government bonds to bolster the economy.
http://finance.yahoo.com/news/Feds-Dudley-says-more-apf-854874356.html?x=0&sec=topStories&pos=6&asset=&ccode=

[Neuro]

Probably it would be better to call it QE 3 or even 4...

What happened was that in the period the fed were not doing any official purchases, they let their banks in the Caribbean do it together with currency swaps with foremost UK, where the English central bank bought bonds for the dollars, and the Fed reserve bought British bonds...

Further before the official QE1, the fed bought bonds from the Caribbean banks too...

[the white rabbit]

Bernanke's “All In" Submitted by Bruce Krasting on 10/01/2010 16:22 -0500

Ben BernankeCongressional Budget OfficeGamblingQE-2recoveryUnemploymentWilliam Dudley


Bernanke had this to say about the employment situation yesterday:


“We need to do our part to help the economy recover” and ensure job growth in the U.S The labor market is growing “too slowly,”

Today William Dudley (FRB NY) chimed in:


The outlook for U.S. job growth and inflation is “unacceptable” and that the Fed will probably need to take action to spur the recovery and avert deflation.

We all know that the unemployment story is a disaster. This graph from the CBO tells the story in a different way.





Current unemployment is 9.5%. The concept of “Full Employment” would still have unemployment at around 5%. So the status today is better stated, “We are about 4.5% above what we would like to be on unemployment”. Looking again at the CBO graph you see that unemployment for greater than 26 weeks is now at a post WWII record of 4.5%. Exactly the same as the current shortfall to the desired Full Employment.

That is not a coincidence. The long-term nature of unemployment we face today is structural. We have exported too many jobs. You can’t fix that problem overnight. And you can’t fix it with another jolt of short-term monetary stimulus. As Philadelphia Fed’s Charles Plosser said this week:


“It is difficult, in my view, to see how additional asset purchases by the Fed, even if they move interest rates on long-term bonds down by 10 or 20 basis points, will have much impact on the near-term outlook for employment.”

What troubles me is that Bernanke is well aware of the fact that his is pushing on a string. There is nothing he can do to address America’s structural unemployment. Yet it is increasingly clear that he will act on November 4th. The comment, “We need to do our part”, says it all. Bernanke is committed with these words.

Do we really need to go down this dangerous road? From the Fed:


9/21/2010 (minutes)
The Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be modest in the near term.

This says to me, “We are going in the right direction, we wish it were faster though”. There is no sense of urgency in the Feds words. “Modest” recovery does not justify extraordinary measures. From Bernanke at Jackson Hole on 8/27:


“The deep economic contraction had ended, and we were seeing broad stabilization in global economic activity and the beginnings of a recovery.”

Nothing scary in those words.


“For a sustained expansion to take hold, growth in private final demand--notably, consumer spending and business fixed investment--must ultimately take the lead. On the whole, in the United States, that critical handoff appears to be under way.”

Sounds encouraging to me.


“I expect the economy to continue to expand in the second half of this year, albeit at a relatively modest pace.”

Why is modest such a bad thing? Should we gamble big time to get growth above modest?

Bernanke has been doing his level best to sell QE-2. He has been parading Fed Governors and talking on the quiet to the press. I feel like I am being barraged by an ad campaign. But he has not sold me. To do that he has to convince me that there is a direct correlation to QE-2 and the structural unemployment problem. He can’t do that. There is no connection.

The next QE starts at 1 Trillion. I think it has to be an open ended approach this time. In other words, “The sky is the limit”. It could easily go to $2T. At that point we will have monetized nearly 50% of public sector debt. Nothing like this has ever been done before (successfully).

Bernanke is gambling with our future. He is making an all in bet on our behalf. QE-2 will cause all manner of distortions. But it won’t address the central problem we are facing. For the life of me I can’t imagine how Bernanke can roll the dice like this. Why bet so big when there is so little to gain?

http://www.zerohedge.com/article/bernankes-%E2%80%9Call

[the white rabbit]

Just bringing info from page 1 over.... 2.2B spent on 11.5B looking get flushed. I have around 36B spent to date . http://www.newyorkfed.org/markets/pomo/display/index.cfm

[madfranks]

QE2: This Time Is Different (http://www.moneyandmarkets.com/qe2-this-time-is-different-40279?FIELD9=1)


Since the Fed’s most recent meeting, everyone seems to have an opinion about another round of extraordinary monetary stimulus and the economic and market reactions such a move could leave in its wake.

Many believe “this time is different” … words that tend to have a very poor track record of coming true.

With that, they think this go-around of QE will actually boost demand. More demand will lead to a pick up in the key components of economic growth for building a sustainable recovery — consumption and investment. And that will lead to a hyper-surge in inflation, debt-monetization and destruction of the dollar.

Meanwhile most of the world expects the mere hint of QE to jumpstart another runaway train of asset reflation — higher stocks, higher commodities, higher risk assets in general and a lower dollar …

I See It Differently

The result of another round of QE at the Fed and other central banks will likely have the same effect as last time: None.

Consumers who have had significant wealth destroyed, are unemployed or face the threat of extended periods of joblessness, and are digging their ways out of a mountain of debt don’t have the appetite to spend nor borrow, regardless of how “easy” the money is said to be.

As for the consequence another round of QE will have on markets, I think this time IS different …

First, another round of QE is no longer accompanied by massive fiscal stimulus from all corners of the world, including the 14 percent of GDP money printing rolled out by China — money that flooded asset markets around the world.

This time, central banks are out of fiscal bullets. Not only has the bond market attack on weak, euro-member governments taken the possibility of more fiscal stimulus off of the table for all major countries, it has also driven dangerously fragile economies into austerity.

Second, idealistic hopes about a sharp V-shaped recovery no longer exist. Therefore, the investor appetite for picking a bottom in a deep recession isn’t there. That card has already been played. And the potential aggressive recovery became a subpar policy-induced recovery, which has now turned into an outlook of years of economic malaise at best.

Third, in 2009 the above two points got the momentum going for the bounce in risk assets. And from there, perception fed perception. The higher the stock market went, the more confident people were about recovery. And the more confident they were about recovery, the higher the market went.

But confidence, perhaps the biggest factor in maintaining global stability — the pursuit of which has been the basis for most of the global emergency policies in the past two years — has been broken again. And it’s always harder to rebuild the second time around.

Lastly, the G-20’s pledge to battle the crisis as a team has slowly given way to protectionism and competitive currency devaluations — not a palatable environment for risk taking.

So I wouldn’t expect the same catalyst (more QE) to produce the same market opportunities we saw in 2009.

While the Fed’s recent statement on monetary policy has caused a stir, I would argue that it was a non-event. The event occurred in August when the Fed announced it would start reinvesting proceeds from its maturing assets — i.e. keep the current QE program going.

This was a clear confirmation that all of the world’s stimuli were powerless in bridging the gap between a beaten down economy and one that was fundamentally ready to recover.

That’s why I think this time IS different. It’s all about the absence of economic recovery and the hostile outlook for the global economy. History suggests we’ll see sovereign debt defaults and larger scale currency devaluations — of which the dollar won’t likely have the luxury to participate, despite all of the assertions that QE2 is all about the dollar.

So given the unsuccessful results from QE1, perhaps QE2 should be getting less attention and more attention should go to the outlook for more shocks and economic crisis.

[the white rabbit]

Ben drops the mother load . Wiping for 5.2B on flushing 23.6B offered. Total to date 41B . Watching for 4B buy back tomorrow to bring us to the 45B announced to be purchased. http://www.newyorkfed.org/markets/pomo/display/index.cfm

[the white rabbit]

The Fed comes in with 2B and change today. I have total of around 43 B spent to date. I roughly added and round up figures; The Fed planned on buying 45B to date. So my math could be the difference. The next release of the approximate purchase amount and tentative outright Treasury operation schedule will be at 2 p.m. on October 13, 2010. See you all then.

[bellevuebully]

Great job on this thread you crazy fucen rabbit!

[the white rabbit]

The Fed comes in with 2B and change today. I have total of around 43 B spent to date. I roughly added and round up figures; The Fed planned on buying 45B to date. So my math could be the difference. The next release of the approximate purchase amount and tentative outright Treasury operation schedule will be at 2 p.m. on October 13, 2010. See you all then.
Hi you know what todays is ? Gold gets a woody day !!!! Hi girls and boys !!!

[the white rabbit]

Across all operations in the schedule listed below, the Desk plans to purchase approximately
$32 billion. This is the amount of principal payments from agency debt and agency MBS expected to be received between mid-October and mid-November.

October 15, 2010 October 18, 2010 Outright Treasury Coupon Purchase 10/31/2014 – 9/30/2016

October 18, 2010 October 19, 2010 Outright Treasury Coupon Purchase 10/31/2016 – 8/15/2020

October 20, 2010 October 21, 2010 Outright TIPS Purchase 1/15/2011 – 2/15/2040

October 22, 2010 October 25, 2010 Outright Treasury Coupon Purchase 4/15/2013 – 9/30/2014

October 26, 2010 October 27, 2010 Outright Treasury Coupon Purchase 2/15/2021 – 8/15/2040

October 28, 2010 October 29, 2010 Outright Treasury Coupon Purchase 4/15/2012 – 3/31/2013

November 1, 2010 November 2, 2010 Outright Treasury Coupon Purchase 4/15/2013 – 9/30/2014

November 4, 2010 November 5, 2010 Outright Treasury Coupon Purchase 10/31/2014 – 9/30/2016

November 8, 2010 November 9, 2010 Outright Treasury Coupon Purchase 10/31/2016 – 8/15/2020


http://www.newyorkfed.org/markets/tot_operation_schedule.html

[the white rabbit]

18B made +27B made +32B going to made = 77B out of thin air !!

[madfranks]

18B made +27B made +32B going to made = 77B out of thin air !!


Don't forget, they get to collect interest on that 77B created out of nothing!

[the white rabbit]

Operation 1 - RESULTS
Operation Date: 10/15/2010

Operation Type: Outright Coupon Purchase

Release Time: 10:15 AM

Close Time: 11:00 AM

Settlement Date: 10/18/2010

Maturity/Call Date Range: 10/31/2014 - 09/30/2016


Total Par Amt Accepted (mlns) : $4,690

Total Par Amt Submitted (mlns) : $14,862

[the white rabbit]

Operation Date: 10/18/2010

Operation Type: Outright Coupon Purchase

Release Time: 10:15 AM

Close Time: 11:00 AM

Settlement Date: 10/19/2010

Maturity/Call Date Range: 10/31/2016 - 08/15/2020


Total Par Amt Accepted (mlns) : $6,260

Total Par Amt Submitted (mlns) : $21,836



11B already spent for round three 32B to be bought before Nov 08

[the white rabbit]

700 million today. Peanuts I say !!! http://www.newyorkfed.org/markets/pomo/display/index.cfm

[the white rabbit]

2.5B spent today 14.2B for round three

[the white rabbit]

Cool 2.5 Billion today 16.7 B for round 3. Total to date 45 B plus 16.7 B = 61.7 B

[the white rabbit]

1.7B today 63.4B spent to date . Ben is looking to spend a total of 77B before Nov.08 10

[the white rabbit]

2.5B today 66B spent to date . Ben is looking to spend a total of 77B before Nov.08 10

[madfranks]

I read in the latest money and markets report that when the Fed officially announces QE2 in a few days they expect them to announce purchasing between $50-100 billion PER MONTH for the foreseeable future.

[the white rabbit]

The Real QE Numbers
Posted: Nov 03 2010 By: Jim Sinclair Post Edited: November 3, 2010 at 3:20 pm

Filed under: General Editorial

Dear CIGAs,

The real number is not $600 billion in QE but $900 billion when you add present in place programs.

This is QE to infinity with the number larger and in the face of massive criticism .

It is only logical to assume that after the Fed’s announcement of QE to $900 billion by June 0f 2011 you would see intervention in the US dollar and Gold markets.

This is QE to infinity.

ShareThis


http://jsmineset.com/2010/11/03/the-real-qe-numbers-2/

[osoab]

Presenting The Fed's Balance Sheet Through 2012 - Fed Will Surpass China As Top Holder Of US Debt By The End Of The Month (http://www.zerohedge.com/article/presenting-feds-balance-sheet-through-2012-fed-will-surpass-china-top-holder-us-debt-end-mon)

So I guess we now need to replace the evil Chinese with Bankers in that video going around.

[DMac]

Presenting The Fed's Balance Sheet Through 2012 - Fed Will Surpass China As Top Holder Of US Debt By The End Of The Month (http://www.zerohedge.com/article/presenting-feds-balance-sheet-through-2012-fed-will-surpass-china-top-holder-us-debt-end-mon)

So I guess we now need to replace the evil Chinese with Bankers in that video going around.


http://www.youtube.com/watch?v=QqMiigy92qU

[the white rabbit]

Radical Difference Between Monetization 1 and QE2
By Daniel R. Amerman, CFA

Overview
It's official: the Federal Reserve announced on November 3rd that it will create approximately $600 billion of new money to fund US Treasury bond purchases, and will also utilize another $250-$300 billion of money that had been previously created (also out of the nothingness). The usual term in the media for these planned purchases is "QE2", as in the second round of quantitative easing.

The "2" in "QE2" implies that this is something that has been done before. This implication is dead wrong.

"QE2" is radically different – and radically more dangerous – than the risky games that were played with earlier "quantitative easings". The Fed's current actions are all too likely to go down into financial infamy, and this brief article is intended to warn readers about some of the key differences this time around.

http://danielamerman.com/articles/Monetize1.htm

[the white rabbit]

Tracking the Trillion Dollar Fed bond buying spree 2 !
Operation 1 - RESULTS
Operation Date: 11/08/2010

Operation Type: Outright Coupon Purchase

Release Time: 10:15 AM

Close Time: 11:00 AM

Settlement Date: 11/09/2010

Maturity/Call Date Range: 10/31/2016 - 08/15/2020


Total Par Amt Accepted (mlns) : $6,260

Total Par Amt Submitted (mlns) : $27,433

Ben taps out on that 77 billion. Marching for 1 trillion after 377 billion to date !!!

[the white rabbit]

The next release of the approximate purchase amount and tentative outright Treasury operation schedule will be at 2 p.m. on November 10, 2010. http://www.newyorkfed.org/markets/tot_operation_schedule.html
Tentative Outright Treasury Operation Schedule - Federal Reserve Bank of New York
www.newyorkfed.org

[the white rabbit]

105 B for the month http://www.newyorkfed.org/markets/tot_operation_schedule.html

[the white rabbit]

The next release of the approximate purchase amount and tentative outright Treasury operation schedule will be at 2 p.m. on December 10, 2010. This release will also include information on prices paid for securities included in the operations listed above.

http://www.newyorkfed.org/markets/tot_operation_schedule.html

[the white rabbit]

587 B to date after this 105 B see you jan 11 for another 105.

[the white rabbit]

692 B to date after this 105 B see you Feb 11 for another 105 B.The next release of the approximate purchase amount and tentative outright Treasury operation schedule will be at 2 p.m. on January 12, 2011.Watch for a pop maybe in gold.