CIGA Rusty Bayonet sends:
“The hot idea is that the Fed will do another round of quantitative easing,” said Ralph Shive, the South Bend, Indiana-based manager of the $1.5 billion Wasatch-1st Source Income Equity Fund. “It’s good for equities because it pumps more money into the system if they buy back mortgage-backed securities and Treasuries. On the other the hand, if they do it they also acknowledge the deep hole we’re in.”
Let me take Rusty Bayonet’s excellent observation one step further and suggest that the execution of another round of liquidity does not necessary imply official recognition of deep economic troubles. History has shown us how easily perceptions can be managed to the point where public comes to distrust their own eyes. Moreover, the public still generally believes that "voting out the bums" in Congress will change the financial and economic landscape after November. Don’t think for a second that more liquidity won’t be hidden behind the curtain of another wave of new hope.
Source: bloomberg.com
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