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Notes to myself, possibly of interest to others.
-- Bill Northlich

Monday, October 18, 2010

Everyone assumes QE2

Mr. Bernanke so eloquently outlined the risks associated with QE2 last Friday, but he obviously believes that the cost of doing nothing outweighs the risks.  But he also knows that there is a chance that QE2 will only be met with limited success — monetary policy, even in a non-conventional form, is a very blunt tool to use to reverse a secular uptrend in the savings rate, re-dress chronic unemployment or induce people to spend rather than correct their debtladen balance sheets...There was a time in the not too distant past when a discourse on QE2 would have triggered a triple-digit rally in the Dow, but instead the market finished lower and on a distribution day to boot.  This is a sure sign that the news is priced in. ---op cit

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