Thursday, October 6, 2011

QE. Next it will be nationalization

Les Paul 1969 © fintag

News comments:
QE is printing money by any other name.

The US and UK have lost the plot. They want (and we are talking about King and Bernanke who were once lovers, sorry lived next door to each other) to reduce long term yields. As the Fed model shows, the correlation of 10 year bond yields and the S&P500 means lower growth when you hammer long term rates.

King goes on a GBP75bn shopping spree (bbc)

Bernaking had one tool. Base rates. Once these were down to nil it was time to swap long term debt with short term debt. Then it was swapping new notes for toxic crap.
The upshot is inflation and a depreciated exchange rate. Savers lose out and have to eat road kill and join the protest on Wall St against the banks. People like myself have to start flogging assets to pay for my lunches.

QE to the average punter means re-capitalizing banks so they can pay their bonuses. Banks win again. You lose again.

So what happens next? Well before long they will start stock picking and buying debt in their favourite companies and countries. And that is nationalization.

Yep, it's the 1970's all over again which is when Bernaking were starting out their careers.

Today's shorts:
The BBC (bbc)

Today's longs:
Vintage Les Pauls (just been offered $12k for this old beauty)

Apple to send me the new prototype iPhone 5 to test