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Hilsenrath: December taper still on table

  • Amid a rush of economists over the past days pushing back their estimates for the beginning of the taper - some well-known ones now out as far as April - the WSJ's Jon Hilsenrath's takeaway from the FOMC statement today is that a December commencement is not off the table.
  • Maybe key is the removal of a reference to tightening financial conditions which had been inserted in September.
  • Stocks have regained their composure following the hawkish lean, but the bond market remains solidly lower, the 10-year Treasury 2.53%.
Comments (9)
  • LOL hilarious - who believes this
    30 Oct 2013, 03:46 PM Reply Like
  • Why would Bernanke not make it a smooth transition to Yellen? If he tapers in December it will not be a smooth transition.
    30 Oct 2013, 03:54 PM Reply Like
  • How about Yellen asking Bernanke to start the work for Her? So she'll just continue the tepering...
    30 Oct 2013, 11:38 PM Reply Like
  • Bernanke would never saddle his protege with the unknown consequences of pushing the taper early in the interest of interest rates that he's trying to get up anyway, and the odds that Yellen is pushing for it is when she'll be under the microscope as the first Chairwoman of the Fed are likewise nonexistent. The influence of the hawks in the Fed has been greatly exaggerated.
    30 Oct 2013, 05:34 PM Reply Like
  • Me thinks they are crying wolf again to keep everyone guessing.. I am not guessing anymore. I was bluffed long enough.

     

    No tapering, In fact we might see an increase in QE'S !!
    30 Oct 2013, 06:33 PM Reply Like
  • you got it. FED is trapped. If they stop printing, nobody will buy a 10 yr. treasury paying 2.5%. The FED is responsible for 90% of all treasury purchases. The only way they will attract others to buy treasuries is if rates go higher and are more appealing (say 4-5%). FED can't let that happen either, because they can't afford the interest on 2.5% much less 4-5% (as per the debt ceiling vote we keep having every 3 months). It's becoming more and more difficult for them to keep the game going as the US dollar is starting to weaken, hence, the reason they are manipulating gold. They need the dollar to appear strong to attract new money. They are now losing control as the East (China, India) see what is really happening and is buying gold bullion by the masses. COMEX is almost out of inventory and when this is discovered, the end game will happen and you will see the squeeze of the century in real gold and mining stocks. IMHO:)
    30 Oct 2013, 06:46 PM Reply Like
  • Very interesting scenario......but what about deflation? And the $US still seems to go up when the going gets tough........this game could go on for a long time yet, sadly.......
    31 Oct 2013, 02:06 AM Reply Like
  • Real unemployment in the US is still 12%, when you subtract the participation rate, the same as in 2009, more or less. House prices in many parts of the World are insane. QE clearly isn't working. Asset prices are insane. The market is now 100% correlated to a totally unpredictable FED. When will Bernanke admit failure and understand that it was a bout of deflation that finally ended the Great Depression and realise that his entire life's work is based on the wrong conclusion?
    30 Oct 2013, 08:54 PM Reply Like
  • drposh:
    He can't admit failure and allow deflation to occur for one simple reason; it would kill many of the banks. He is committed to protecting all of them whether they be "too big to fail" or not. Follow the path:
    1. Mark to market rules are eliminated. Banks are allowed to mark-up all their toxic, crappy mortgage securities to fantasy values.
    2. Banks sit on foreclosed homes waiting for house values to return to the glory days thereby repairing their balance sheets. Good luck with that one guys! By "stringing out" the foreclosure process it eventually makes things worse as homes sit empty, property taxes/revenues go uncollected, and property values stagnate or actually decline.
    3. By focusing all their energies on protecting the banks, the same flaws that led to the credit crisis go unaddressed (massive derivative exposure, REPO agreements, too much leverage). We never allowed a full deleveraging process to occur which would have "cleansed" the credit lines. Instead the Fed & Congress (with a totally worthless Dodd-Frank bill) have simply kicked the can down the road.

     

    But you are right. Bernanke seems to not have learned the right lesson from his research of the Depression. He criticized the Japanese for not doing enough stimulus. But 5 years into this stimulus program the US economy is still "flat on its back".
    The Fed is totally out of bullets. They have painted themselves into a corner with no way out. There is no way they can unwind a $4 trillion balance sheet without severe repercussions to both the bond and stock markets.
    We are screwed.

     

    S.
    31 Oct 2013, 04:20 AM Reply Like
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