Update from prior email
Posted by WARREN MOSLER on September 26th, 2011
As previously suggested, the Fed doing anything would cause markets to believe it’s all going bad out there.
However, the US economic news still looks like modest improvement,
so I still suspect the reaction to the Fed will be temporary, and start wearing off around noon Eastern time today.
***SORRY, MISSED THE BOTTOM BY A FEW HOURS.
;)
September 26th, 2011 at 1:13 pm
The “bumper crop of dollars” has failed to materialize as you previously predicted (and with the Tea Party in charge, it’s more like drought conditions coming up fiscally speaking). That’s causing a commodities unwind and is providing headwinds for equities (for companies with foreign earnings, i.e., all of them).
It appears the domestic economic news is no match for that confluence, although time will tell.
Reply
WARREN MOSLER Reply:
September 26th, 2011 at 2:03 pm
‘fraid you might be right
:(
Reply
Djp Reply:
September 26th, 2011 at 9:54 pm
@Paul Mineiro,
Last I checked, raising taxes also reduces net financial assets.
Pretty sure the tea party would fall in line with cutting spending and cutting taxes even more.
Reply
WARREN MOSLER Reply:
September 27th, 2011 at 5:18 am
except they want a balanced budget amendment.
they want to cut taxes and cut spending down to the lower tax level.
Reply
Djp Reply:
September 27th, 2011 at 8:23 pm
@WARREN MOSLER,
Agreed, that is what they say they want. Hence, the “fall in line with.” I think if you polled them and tried to get a sense of what’s more important – reducing gov spending or balancing the budget, they’d go for reduced spending.
Obama wants to raise taxes – but I don’t believe that he really thinks his current proposal would go through Congress. So, in his case I don’t even think that what he’s asking for is actually what he wants. Just because I would like people to actually say what they think, doesn’t mean I think everyone does (referencing previous discussions where some have suggested elusive and somewhat misleading talking points would be a good way to “sell” MMT).
Danny Reply:
September 27th, 2011 at 1:02 pm
@Djp,
The core of the Tea Party ideology is tied, at least on economic matters, to Ron Paul and Austrian Economics. There is diversity among their ranks wrt foreign policy and social issues (the conservative/libertarian split), but on money matters, they all seem to be in the gold standard/balanced budget camp.
Reply
Djp Reply:
September 27th, 2011 at 9:01 pm
@Danny,
Currently, it sounds like everyone’s in that camp. Who isn’t? Other than those on this board.
Danny Reply:
September 28th, 2011 at 2:19 pm
Agreed to a certain extent. But the fact remains you don’t see many Democrats arguing for a balanced budget amendment or God forbid, a return to the gold standard. Those issues are being driven by the Tea Party and their GOP elected representatives in Congress (and statehouses across the nation). The Democrats (as usual) are just responding to the narrative set by their opponents.
September 26th, 2011 at 2:51 pm
Clarification: your prediction was dollar strength (no bumper crop) and this prediction is coming to pass.
Clear to long-time readers I think but my previous comment was very poorly worded.
Reply
WARREN MOSLER Reply:
September 26th, 2011 at 3:05 pm
right, dollar looks to have bottomed back then in May with Bernanke’s first dollar speech as discussed.
It’s been a long lazy unwind of errant QE positions,
with gold taking that last spike up when Hugo asked for delivery,
and then the fall when they found his gold and started shipping it, as discussed here as well.
Reply
KKKen530 Reply:
September 27th, 2011 at 8:15 am
@WARREN MOSLER, So,will gold continue to drop,or will the goldbugs drive the price up again ??
Reply
September 27th, 2011 at 4:31 am
I’m looking at the chart. Did you mean you missed the bottom by a couple of days? Not trolling here, just wanted clarification as the Dow before and after the Fed was down a few hundred dollars.
Reply
WARREN MOSLER Reply:
September 27th, 2011 at 5:21 am
I commented that the market would react negatively if the Fed signaled they thought the outlook had deteriorated
enough for them to take additional actions. I then ‘teased’ that stocks would weaken until noon Friday. I was wrong in that they weakened further after that noon prediction before turning north.
Reply
Colin Reply:
September 27th, 2011 at 7:06 am
This was on reddit.com and a few other websites. (The liberal ones that are mad at bankers but can’t articulate why) A trader is basically predicting a black swan 2012. He seems competent. Do you agree or disagree?
http://www.zerohedge.com/news/bbc-speechless-trader-tells-truth-collapse-comingand-goldman-rules-world
Reply