QE 2.0 Or QE 1.999: GSEs And FHA Are Preparing Auto-Refi Program Taking Millions To Current Market Rates Overnight

The main story making waves this afternoon is the presentation by St. Louis Fed's James Bullard titled "

" in which the Fed president pledges that the Fed should immediately recommence purchasing Treasurys if the deflation scenario picks up, which he notes is an increasingly likely probability. In the paper, Bullard argues that the Federal Open Market Committee’s extended period language may be increasing the probability of a Japanese-style deflationary outcome in the U.S. within the next several years, and concludes that an appropriate quantitative easing policy offers the best hope for avoiding a low nominal interest rate, deflationary outcome. "The U.S. is closer to a Japanese-style outcome today than at any time in recent history...A better policy response to a negative shock is to expand the quantitative easing program through the purchase of Treasury securities.” While of course keeping up a facade that the Fed is in control, Bullard does speculate about the downside case: “The most likely possibility from where we sit today is that the recovery will continue through the fall, inflation will start to move up and this issue will all go away. Suppose we get another negative shock, another surprise. We have to be prepared in that event to have a plan in place to do something." Yet all of this is in the sphere of probabilities of QE2.0 and for now at least, is something to consider in the intermediate future. Yet something far more sinister may be brewing just below the immediate horizon.

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Mars  - Small Gains THUR ok |173.197.24.xxx |2010-07-29 14:33:23 Well, with 30 min. remaining, I'm trying to see the setup for FRI. FRI JUL 30 is a projected short-term trend change date for the DJIA and COMP, whereby the short-term trend leading into FRI would be expected to reverse. So, if we close THUR with slight gains, that may be ok, as we'd then anticipate a decline for FRI. Of course, if we sell-off today into the close, then the reverse (trend up FRI) would hold. .....the optimistic bear ReplyQuote 0 0

Ron Rebner |173.88.241.xxx |2010-07-29 15:14:13 We just don't learn from our mistakes. I know someone (a very good person) who has been on unemployment for a while. He has defaulted on his mortgage and was prepared to lose his home. He just checked again into one of these government programs and, you are not going to believe this. They are trying to get his mortgage payment down to 31% of his unemployment check! They are looking at a combination of lowering the interest rate and going beyond 30 years. He doesn't like our government doing this but he has no choice if he wants to keep his home. On another note, right now Fannie and Freedie only require 3% down on a mortgage and in some case zero! What? We are sowing the seeds for the next fiasco in housing. Our government is being stupid and irresponsible. They are dangerous and ruining our country. Please get out and vote (and tell your family and friends) and stop these people from further horrific damage. They are mortaging our great, great, grandchildren. ReplyQuote 0 0

KP |12.174.29.xxx |2010-07-29 15:50:06 putting stiulus in the hands of consumers is similar to the suggestion that Dr Hugh Mclung made early on into this whole crisis - before QE-1, his suggestion was; instead of putting this bailout money in the hands of the banksters that put us in this problem, put the money into the hands of consumers that will in turn use the money to pay down debt and stimulate the economy......either way we got problems, but this sounds better than what we did earlier. ReplyQuote 0 0

Ron Rebner |173.88.241.xxx |2010-07-29 15:29:12 Volume on the NASDAQ ended above average at 2.34 billion shares. Volume was only 1.1 billion on the NYSE but that was higher than we have been running. A/D ratios were essentially flat although the ratio on NASDAQ volume was a negative 1.9 to one. It was a distribution day. ReplyQuote 0 0

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