English is my native tongue. Yours?
You spoke Polish until kindergarten when theyenrolled you in the Alliance
until you were sent to bilingual Korean classes everyweekend up to the age of 16 when you got an after-school job in a bodega?No problem, Sunshine. You, too, can understand that the message of 2010 is the same as themessage of 2012.
. He must have had one heck of a scare from the August NFPreport which is due a week from today. Yee-ha.
The difference, IMHO, is in the focus of his commentary.In 2010, it was a broader-based view of economic malaise that inspired his wording. Today,there is a major league, almost exclusive focus on the problem of the Unemployment situation.Here are a couple o
things which he said; had I been in attendance, I probably would be underarrest by now.This is basically how he describes the genius of buying US treasuries: It
t you know?The FED buys the govvies, taking them from, say, investor hands. Govvie prices go up; yieldsdown. The investor then takes that money and goes and buys something else, say, MBS, takingthem from other investor hands. MBS prices go up, yields go down. And so on and so forth,thru the asset-class food chain, noting that at each and every turn, the grease that makes theeconomic wheels turn, is being spread around.Eventually, the chain gets to stocks. This is where I had to restrain myself. (Italics are myinput.)
Importantly, the effects of *LSAPs do not appear to be confined to longer-term Treasuryyields.Notably, LSAPs have been found to be associated with significant declines in the yields on bothcorporate bonds and MBS.
The first purchase program, in particular, has been linked tosubstantial reductions in MBS yields and retail mortgage rates. (
s the channel thingwhere the positive effects of the stimulus are passed along.
)LSAPs also appear to have boosted stock prices, presumably both by lowering discount rates andby improving the economic outlook; it is probably not a coincidence that the sustained recoveryin U.S. equity prices began in March 2009, shortly after the FOMC's decision to greatly expandsecurities purchases. This effect is potentially important because stock values affect bothconsumption and investment decisions.
*Large Size Asset PurchasesGo on. I
ll wait for you to read that again. This essobee has abused not only the micro guys butthe macros as well. As he has jackassed the asset classes around until the only focus is Risk Onor Risk Off on any given trading day. I could spit.