Friday, June 10, 2011

"Just $50 Billion Left in QE2" and "The World After QE2 "

Reports from two outposts of the Dow Jones Empire.
From MarketBeat:
 The New York Fed announced earlier that there’s only $50 billion left for the Fed to buy in the short remaining life of QE2....MORE
And Barron's cover story last Saturday:

Despite investors' worries, the markets and economy won't be doomed when the Fed's massive stimulus program ends. 
The ripest source of Wall Street chatter, investor anxiety and pundit prognostication these days is the impending end of the Federal Reserve's second "quantitative-easing" program on June 30. By then, the central bank will have bought $600 billion in Treasury securities to help fund the federal deficit and injectconjured money into the financial system. QE2, launched last autumn, follows what's now called QE1—when the bank soaked up $1 trillion-plus in mostly mortgage-backed securities—from late 2008 through March 31, 2010.
John MacDonald for Barron's
Just how much impact QE2 has had and how its demise will affect the nation are matters of debate. But it's clear that the Fed won't pull the plug abruptly. While the central bank will cease enlarging its balance sheet (now $2.8 trillion, up from around $900 billion before the 2008 financial crisis), the bank will keep it stable by reinvesting interest payments and principal from maturing securities, until the economy looks to be on firmer footing.
Also, hundreds of billions of dollars that the Fed's policies added to U.S. banks' coffers will be sloshing around for years, available for use as the economy expands. Also clear: A QE3 is unlikely, even though last week's disappointing data on housing, manufacturing, job growth and consumer confidence kicked up the predictable chorus calling for exactly that. Economic numbers, inflation data and financial conditions probably would have to stay dismal for many months for Fed chief Ben Bernanke to launch a third bout of pump-priming....MUCH MORE