Phil's Stock World

“The New Bubble Is In Stimulants…..” Rosenberg

by ilene - November 5th, 2009 8:29 pm

I want to add that the bubble is also in outright & hidden bailouts…..Nothing really new but hours/days away from the next mega bailout ( FHA ) a sober summary how wasteful the resources are "squandered"..…..

So the U.S. economy is growing again. But how can it not be growing with all the dramatic stimulus? The question should be “why only 3.5%”?

> Für einen teiferen Einblick was die USA veranstalten müssen um überhaupt ein positives GDP Ergebnis auf die Beine zu stellen kann das in "A Sham GDP For A Sham Economy"…… nachlesen….

Now the U.S. government is going to not just extend but indeed expand the tax credits for homeownership. This is happening at a time when the fiscal deficit is 10% of GDP. Simply amazing. The sector already receives more in the way of government support than any other area, and it adds zero to the capital stock or productivity growth. Oh, but it makes us better citizens. Renting must be for losers.

And then we see that the Fed’s TALF (Term Asset-Backed Securities Loan Facility) program that began in March just broke the $90 billion mark. This has basically supported 75% of the growth in the asset-backed market, almost evenly split between auto credit and credit cards because at over a 130% household liability-to-disposable income ratio, the government seems to believe we don’t have enough debt on our balance sheets. Honestly — you can’t make this stuff up.

But here is the real kicker. The Federal Housing Authority (FHA). If you’re wondering how it is that the U.S. housing market has managed to rise from the ashes, well, consider that the government-insured FHA program moved into high gear this year and has basically filled the gap vacated by the private sector. (where default rates are really becoming a problem) should not go unnoticed (and they weren’t by the staff at the WSJ that uncovered the growing problems in yesterday’s edition — FHA Digging Out After Loans Sour on page A2).

[No Easy Exit for Government as Housing Market's Savior]

The efforts to allow practically anyone to secure a mortgage not just

…

When Monetizing 12% Percent Of GDP Isn´t Enough…….

by ilene - August 19th, 2009 2:44 pm

Not quite an "Exit Strategy"……. This Cartoon on "Green Shoots" is spot on….. As long as the pound & gilts are not crashing this will continue…..I´m pretty sure Bernanke is watching the market reaction very closely…. Especially with the Fed running low on ammo….. Read A 300-year-old example of quantitative easing…. John Law, Alan Greenspan, Ben Bernanke… via The Mess That Greenspan Made as a reminder what can happen……

The Governor invited the Committee to vote on the proposition that:

Bank Rate should be maintained at 0.5%;

The Bank of England should finance a further £50 billion of asset purchases by the creation of central bank reserves, implying a total quantity of £175 billion of such asset purchases. The Bank should seek to complete the additional purchases within the next three months.

Six members of the Committee (Charles Bean, Paul Tucker, Kate Barker, Spencer Dale, Paul Fisher and Andrew Sentance) voted in favour of the proposition. Three members of the Committee (the Governor, Tim Besley and David Miles) voted against, preferring to increase the size of the asset purchase programme by £75 billion to a total of £200 billion.

Yep, Mervyn King, together with Besley and Miles wanted the rate of monetary stimulus increasing, not just extending at the current rate of £50bn-a-quarter. That was good for half a cent off sterling versus the dollar and a third of a cent v the euro on Wednesday morning. Gilts, of course, spiked higher.

Somebody stop me Alice Cook from the great blog UK Bubble

The extraordinary thing about UK monetary policy today is how close it is shadowing fiscal policy. This year, the Bank of England printing presses will produce roughly the same amount of new money as this year’s fiscal deficit. Or to put it more bluntly, the private sector have, on a net basis, stopped lending money to the government.

The Casey Report

> The estimated issuance is based on this "optimitic" forecast…. Especially compared to the IMF, OECD, Bloomberg

…