Wednesday, October 3, 2012

That Was Short-Lived -- QE3 -- So, What's Next?


October 4, 2012: mortgage rate hits record low -- 3.36 percent

Original Post

Update: Fed Easing Has Little Impact So Far -- Out of Bullets? Prior to QE3, I posted that I was hoping the Fed would announce QE3: I was curious if the Fed had any more arrows in its quiver. 

Apparently not.
The Federal Reserve's latest easing program may be nicknamed "QE Infinity" on Wall Street, but it's having a very limited effect on the markets and economy so far
Stocks have been flat to slightly lower since the central bank announced the third round of its quantitative easing program — QE3 — while economists remain pessimistic that it will achieve its stated goal of bringing down the unemployment rate. Consequently, sentiment is beginning to build that the Fed may be running out of bullets
Sentiment is building for some. For others it's already a fact: the Fed has run out of bullets. 

Original Post On September 24, 2012, MDW wrote:

Is QE3 Already a Failure? 

Riding a bike gives one a lot of time to think. Seeing the market swoon again today, and the price of oil drop again, suggests to me, at least, that QE3, announced just a week or so ago, is already a failure. When it was announced, I thought as much. I have no idea what the expectations were, and don't even know if I have the whole story, but apparently the Fed is just buying more mortgage-backed securities. With mortgages already about as low as they can go, and folks still not buying, suggests that mortgages are not the issue. So, I'm probably all confused on that, and my reasoning is probably all wrong, but the bottom line for me is that there was nothing in QE3 that excited me. And today, while riding around Belmont (a suburb of Boston), I simply thought that QE3 is already a failure.

So, tonight, looking at today's business news, that's the Yahoo!Finance headline: if QE3 doesn't do what it's supposed to, the Federal Reserve is ready to step in and buy other assets (with money it doesn't have):
The Federal Reserve could expand its stimulus package to include assets other than mortgage-backed securities if the U.S. economy fails to respond to its latest effort to jump-start the economy. 
The article says the Fed is limited by what it can buy, but those boundaries are not written in stone; they can be modified.

I'm hoping they considering buying "stuff" that makes it easier for me to finance the following: a) a new Honda Civic; b) a new Apple MacAir; and, c) a new, high-end bicycle. I wonder if there's a way they could throw in a pre-paid Starbucks card for military vets?

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