Business Insider was out yesterday with an article questioning the pace and magnitude of the Federal Reserve's and the BOJ's asset buying programs, asking the question "Have the central banks lost control". One paragraph quips....
Because the Federal Reserve is by far the biggest player in the Treasury market, the concern is that when it makes the eventual decision to taper back the pace of the bond purchases it makes under its open-ended quantitative easing program, markets could destabilize as a result.
This presupposes the assertion that the central were ever in control or that they act as a stabilizing factor. What the author and many others are missing is despite impressive conditionals and PHD thesises, no one person or group is ever more powerful than the market. You can paper over problems, you can manipulate asset prices, you can nudge investors and intermediaries in ways as you see fit, but all these actions obfuscate the fact that the recession is the recovery. Economic recessions are the recovery process much as the hangover and sickness after a night of partying or a fever when sick is the body's process of correcting imbalances or ills.
What were are seeing now that Fed is beginning to talk tapering their QE program (and in conjunction with the shared leverage Santelli spoke of here.) is the market beginning to assert itself and manipulated forces that have acted upon asset prices beginning to dissipate. I think Santelli's comments about watching volatility will resonate profounded.
Because the Federal Reserve is by far the biggest player in the Treasury market, the concern is that when it makes the eventual decision to taper back the pace of the bond purchases it makes under its open-ended quantitative easing program, markets could destabilize as a result.
This presupposes the assertion that the central were ever in control or that they act as a stabilizing factor. What the author and many others are missing is despite impressive conditionals and PHD thesises, no one person or group is ever more powerful than the market. You can paper over problems, you can manipulate asset prices, you can nudge investors and intermediaries in ways as you see fit, but all these actions obfuscate the fact that the recession is the recovery. Economic recessions are the recovery process much as the hangover and sickness after a night of partying or a fever when sick is the body's process of correcting imbalances or ills.
What were are seeing now that Fed is beginning to talk tapering their QE program (and in conjunction with the shared leverage Santelli spoke of here.) is the market beginning to assert itself and manipulated forces that have acted upon asset prices beginning to dissipate. I think Santelli's comments about watching volatility will resonate profounded.
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