QE4? The Big Wall Street Banks Are Already Complaining That QE3 Is Not Enough

QE3 has barely even started and some folks on Wall Street are already clamoring for QE4.  In fact, as you will read below, one equity strategist at Morgan Stanley says that he would not be “surprised” if the Federal Reserve announced another new round of money printing by the end of the year.  But this is what tends to happen when a financial system starts becoming addicted to easy money.  There is always a deep hunger for another “hit” of “currency meth”.  Federal Reserve Chairman Ben Bernanke was probably hoping that QE3 would satisfy the wolves on Wall Street for a while.  His promise to recklessly print 40 billion dollars a month and use it to buy mortgage-backed securities is being called “QEInfinity” by detractors.  During QE3, nearly half a trillion dollars a year will be added to the financial system until the Fed decides that it is time to stop.  This is so crazy that even former Federal Reserve officials are speaking out against it.  For example, former Federal Reserve chairman Paul Volcker says that QE3 is the “most extreme easing of monetary policy” that he could ever remember.  But the big Wall Street banks are never going to be satisfied.  If QE4 is announced, they will start calling for QE5.  As I noted in a previous article, quantitative easing tends to pump up the prices of financial assets such as stocks and commodities, and that is very good for Wall Street bankers.  So of course they want more quantitative easing.  They always want bigger profits and bigger bonus checks at the end of the year.

But at this point the Federal Reserve has already “jumped the shark”.  If you don’t know what “jumping the shark” means, you can find a definition on Wikipedia right here.  Whatever shreds of credibility the Fed had left are being washed away by a flood of newly printed money.

Those running the Fed have essentially used up all of their bullets and the next great financial crisis has not even fully erupted yet.

So what is the Fed going to do if the stock market crashes and the credit market freezes up like we saw back in 2008?

How much more extreme can the Fed go?

One can just picture “Helicopter Ben” strapping on a pair of water skis and making the following promise….

“We are going to print so much money that we’ll make Zimbabwe and the Weimar Republic look like wimps!”

Sadly, the truth is that money printing is not a “quick fix” and it never has been.  Just look at Japan.  The Bank of Japan is on round 8 of their quantitative easing strategy, and yet things in Japan continue to get even worse.

But that is not going to stop the folks on Wall Street from calling for even more quantitative easing.

For example, the top U.S. equity strategist for Morgan Stanley, Adam Parker, made headlines all over the world this week by writing the following….

“QE3 will likely be insufficient to significantly boost equity markets and we wouldn’t be at all surprised to see the Fed dramatically augment this program (i.e., QE4) before year-end, particularly if economic and corporate news continue to deteriorate as they have over the past few weeks.”

Did you get what he is saying there?

He says that QE3 is not going to be enough to boost equity markets (the stock market) so more money printing will be necessary.

But wasn’t QE3 supposed to be about creating jobs and helping the middle class?

I can almost hear many of you laughing out loud already.

As I have written about before, QE3 is unlikely to change the employment picture in any significant way, but what it will do is create more inflation which will squeeze the poor, the middle class and the elderly.

The truth is that quantitative easing has always been about bailing out the banks, and the hope is that this will trickle down to the folks on Main Street as well, but that never seems to happen.

Wall Street is not calling for even more quantitative easing because it would be good for you and I.  Rather, Wall Street is calling for even more quantitative easing because it would be good for them.

A CNBC article entitled “Fed May Need to Boost QE ‘Dramatically’ This Year: Pros” discussed Wall Street’s desire for even more money printing….

The Federal Reserve’s latest easing move has been nicknamed everything from “QE3” to “QE Infinity” to “QEternal,” but some on Wall Street question whether the unprecedented move will be QEnough.

And of course everyone pretty much understands that QE3 is definitely not going to fix our economic problems.  Even most of those on Wall Street will admit as much.  In the CNBC article mentioned above, a couple of economists named Paul Ashworth and Paul Dales at Capital Economics were quoted as saying the following….

“The Fed can commit to deliver whatever economic outcome it likes, but the problem is that  the crisis in the euro-zone and/or a stand-off in negotiations to avert the fiscal cliff in the U.S. may well reveal it to be like the proverbial Emperor with no clothes”

An emperor with no clothes?

I think the analogy fits.

The Federal Reserve is going to keep printing and printing and printing and things are not going to get any better.

At this point, economists at Goldman Sachs are already projecting that QE3 will likely stretch into 2015….

The Federal Reserve’s QE3 bond buying program announced earlier this month could last until the middle of 2015 and eventually reach $2 trillion, according to an estimate from economists at Goldman Sachs.

The Goldman economists also wrote in a report that they believe the Fed will not raise the federal funds rate until 2016. This rate, which is used as a benchmark for a wide variety of consumer and business loans, has been near 0% since December 2008. The Fed said in its last statement that it expected rates would remain low until mid-2015.

So why is Wall Street whining and complaining so loudly right now?

Well, even with all of the bailouts and even with all of the help from the first two rounds of quantitative easing, things are still tough for them.

For example, Bank of America recently announced that they will be laying off 16,000 workers.

In addition, there are rumors that 100 highly paid partners at Goldman Sachs are going to be getting the axe.  It is said that Goldman will save 2 billion dollars with such a move.

We haven’t even reached the next great financial crisis and the pink slips are already flying on Wall Street.  Meredith Whitney says that she has never seen anything quite like this….

“The industry is as bad as I’ve seen it. So it’s certainly not a great time to be on Wall Street.”

But of course Wall Street is not going to get much sympathy from the rest of America.  The truth is that things have been far rougher for most of the rest of us than things have been for them.

When the last crisis hit, they got trillions of dollars in bailout money and we got nothing.

So most people are not really in a mood to shed any tears for Wall Street.

But of course the Federal Reserve is definitely hoping to help their friends on Wall Street out by printing lots of money.

You never know, by the time this is all over we may see QE4, QE5, QE Reloaded, QE With A Vengeance and QE The Return Of The Bernanke.

Meanwhile, Europe is gearing up to print money like crazy too.

A couple months ago, European Central Bank President  Mario Draghi made the following pledge….

“Within our mandate, the European Central Bank is ready to do whatever it takes to preserve the euro, and believe me, it will be enough.”

And of course the Bank of Japan has joined the money printing party too.  The following is from a recent article by David Kotok….

The recently announced additional program by the BOJ includes a fifty-percent allocation to the purchase of ten-year Japanese government bonds. The other fifty percent will buy shorter-term government securities. Thus, the BOJ is applying half of its additional QE stimulus to extracting long duration from the government bond market, denominated in Japanese yen.

All of the central banks seem to be getting on the QE bandwagon.

But will this fix anything?

Unfortunately it will not, at least according to Paul Volcker….

“Another round of QE is understandable – but it will fail to fix the problem. There is so much liquidity in the market that adding more is not going to change the economy.”

Sadly, most Americans have a ton of faith in the people running our system, but the truth is that they really do not know what they are doing.  Just check out what Dallas Fed President Richard Fisher said the other day….

“The truth, however, is that nobody on the committee, nor on our staffs at the Board of Governors and the 12 Banks, really knows what is holding back the economy. Nobody really knows what will work to get the economy back on course. And nobody – in fact, no central bank anywhere on the planet – has the experience of successfully navigating a return home from the place in which we now find ourselves. No central bank – not, at least, the Federal Reserve – has ever been on this cruise before.”

Can you imagine the head coach of a football team coming in at halftime and telling his players the following….

“Nobody on the coaching stuff really has any idea what will work.”

That sure would not inspire a lot of confidence, would it?

Perhaps the Fed should be open to some input from the rest of us.

Actually, back on September 14th the Federal Reserve Bank of San Francisco posted a poll on Facebook that asked the following question….

What effect do you think QE3 will have on the U.S. economy?

The following are the 5 answers that got the most votes….

-“Long term, disastrous”

-“Negative”

-“Thanks for $5 gas”

-“I can’t believe you think this will work!”

-“Fire Bernanke”

So what do you think about the quantitative easing that the Federal Reserve is doing?

Please feel free to post a comment with your thoughts below….

The Sobering Reality Of What Life Is Like In Reno, Nevada

What do you do when the city where you live is dying?  All over the United States formerly great cities are crumbling, but some are definitely in worse shape than others.  One reader recently wrote to me about what she sees happening all around her in Reno, Nevada.  The unemployment rate in Reno is now up to 11.7 percent, which is well above the national average of 8.3 percent.  But that doesn’t tell the whole story.  The recent recession hit Nevada particularly hard and people have been moving out of the state in waves.  In fact, the labor force in Nevada has shrunk by close to 20 percent over the past year as workers have moved elsewhere in search of work.  But even though the labor force is now nearly 20 percent smaller, the unemployment rate is still well above 11 percent.  There simply are not enough jobs in large Nevada cities such as Reno and Las Vegas.  Unfortunately for Reno, it does not have the same kind of big corporate money pouring into it that Las Vegas does.  The good news is that you can buy a house very, very cheaply in Reno because homes were foreclosed on in droves during the housing crash.  Even today, some housing developments that were put up near the end of the boom times look like virtual ghost towns.  The main industry in Reno is “entertainment”, but many of Reno’s strip clubs and gambling establishments have aged so badly at this point that they just look kind of depressing.  I guess that is kind of fitting, because Nevada has the fifth highest suicide rate in the nation, and Reno has been ranked as one of the top 10 depressed cities in the entire country.  As the city has declined, gangs have moved in and the drug trade is flourishing.  Reno has been called the meth capital of America, and crime is on the rise.  Despite being surrounded by tremendous natural beauty, Reno has become a very unpleasant place in which to live.  But what is happening in Reno is also happening in hundreds of other communities across the United States.  Our economy is collapsing and our cities are crumbling right in front of our eyes, and it is only going to get worse from here.

A reader of my site named Heather who has been unemployed since November of last year recently shared the following with me….

I am living in Reno/Sparks Nevada and I feel like it is ground zero for collapse. There are a lot of people who are in denial right now and cannot see the larger picture. I keep also saying we are the canary in the coal mine for the rest of the country.  It is quite depressing driving around seeing empty office buildings with vacancies and retail areas just empty. Went to the stores and retail seems pretty slow also. I am volunteering at ProNet locally and it helps unemployed people finds jobs and skills. It has been depressing there too with very little jobs out there for many people who need one.

She said that I should share what is happening in Reno with my readers.  She wanted people to know what those living in Reno are going through.

You might think that since Reno is so sunny, so warm and surrounded by such natural beauty that it would be one of the happiest places in America.

Unfortunately it turns out that the opposite is true.

Reno is actually a very sad place.

In fact, last year Men’s Health ranked Reno as the ninth saddest city in the United States.

In response to this ranking, one resident of Reno wrote the following….

In light of this disheartening list-making, it is, of course, important for Nevadans to look on the bright side. Rather than allowing these statistics to depress us further, we can consider them a series of challenges that make living in places like Reno and Las Vegas all the more impressive. You don’t just live in Reno. You survive Reno! To dwell in Reno, you must triumph over the odds that are stacked against you—one of the things we’re supposed to do best here.

If we can withstand all of the emotional curveballs thrown at us because we have selected such a turbulent location in which to reside, we can probably survive anything.

As a lifelong Renoite, I am inclined to respond to these lists with defiance. Yeah, things can look pretty grim sometimes when no one can find a job, and there seems to be no way out.

And that is how many Americans are feeling these days.  They are broke, unemployed, depressed and out of options.

How can you pick up and start a new life somewhere else when you have no job and no money?

Sadly, a lot of younger Americans are turning to drugs in an attempt to escape the pain of their daily lives.

One article that I found attempted to find humor in the raging meth epidemic that is happening in Reno….

Reno has been affectionately called the meth capital of the nation. Some foolishly think mass drug usage can ravage a city as swiftly as it can ruin a user’s clear complexion. In all reality, drug addiction is no more than an endearing quirk, certainly not a cause for concern. Babies and adolescents with addiction-addled parents should stop being coddled and learn how to take care of themselves. I’ve been doing my own laundry since I was six months old­ — I’m sure they can do the same. If there is anything disturbing about the meth problem in Reno, it’s that it shows the lack of variety in this town. Why don’t you try some uppers like MDMA? Your teeth will thank me.

Unfortunately, Reno is far from alone.  In the past I have written about how formerly great cities such as Detroit, Cleveland and Baltimore are completely falling apart as well.  This kind of thing is literally happening from coast to coast.

There is a very serious lack of decent jobs in America right now.  At this point only 24.6 percent of all jobs in the United States are good jobs.

This has made it increasingly difficult for Americans to be able to take care of themselves.

If you can believe it, more than 100 million Americans are on welfare at this point.

And that number does not even include the tens of millions of people that are on Social Security and Medicare.

What in the world has happened to us?

These days most Americans work really hard all of their lives but never end up reaching their dreams.

In fact, one recent study found that 46 percent of all Americans die with less than $10,000 worth of financial assets.

Talk about depressing.

But instead of having us focus on how bad the economic numbers are, the Federal Reserve wants to start measuring how “happy” everyone is.  The following is from a recent ABC News article….

Ben Bernanke wants to know if you are happy.

The Federal Reserve chairman said Monday that gauging happiness can be as important for measuring economic progress as determining whether inflation is low or unemployment high. Economics isn’t just about money and material benefits, Bernanke said. It is also about understanding and promoting “the enhancement of well-being.”

So what would you say if the Federal Reserve contacted you and asked if you are happy?

Please feel free to post a comment with your thoughts below….

America After Dark: Desperate Meth Heads, Rampant Human Trafficking And Millions Of Criminal Predators Searching For A New Victim

When the sun goes down every night, America becomes a very frightening place.  There are communities all over the country where drug dealing, human trafficking and gang violence have gotten so out of control that authorities don’t really know what to do about it.  In America tonight, thousands of meth heads will break into homes as they desperately search for enough money for another hit.  In America tonight, thousands of children will be sold for sex at truck stops and on street corners.  In America tonight, millions of criminal predators will be searching for a new victim.  From the top levels of the federal government all the way down to the most depraved criminals on the street, America is rotting.  Once upon a time our tremendous affluence masked the moral decay that was happening in this nation, but now that the economy is falling apart the damage to the fabric of our society is being revealed.  We have become a nation of addicts, junkies, thrill seekers and predators.  When we finally see the U.S. economy fully collapse, millions of desperate, angry and depraved monsters will take out their sick frustrations on all the rest of us.

It isn’t talked a lot about anymore, but the meth epidemic in America is getting worse.  According to PBS, there are approximately 1.4 million meth users in America.  Meth is unbelievable addictive and it can absolutely destroy your life.  If you doubt this, just check out these before and after pictures.

Sadly, there are indications that meth use is on the rise once again.  According to the DEA, meth seizures increased from 2,839 in 2007 to 6,168 in 2010.

When you take meth, it can literally make you crazy.  The following is from a recent USA Today article….

A mother in Bakersfield, California, was sentenced Tuesday for stabbing her newborn while in a meth rage. An Oklahoma woman drowned her baby in a washing machine in November. A New Mexico woman claiming to be God stabbed her son with a screwdriver last month, saying, “God wants him dead.”

Large numbers of meth addicts turn into thieves when they run out of money.  Often, they will steal just about anything they can in order to get money for their next hit.  Some things that meth addicts have stolen recently include agricultural plumbing, copper wiring and lawn sprinklers.

And making meth can be extremely dangerous as well.  U.S. hospitals are filled with thousands and thousands of uninsured burn patients that were horribly burned while trying to make “shake and bake” meth.

The following comes from a recent Daily Mail article….

It is filling hospitals with thousands of uninsured burn patients requiring millions of dollars in advanced treatment – a burden so costly that it is contributing to the closure of some burns units.

So-called ‘shake-and-bake’ meth is produced by combining raw, unstable ingredients in a two-litre bottle.

But if the person mixing the noxious brew makes the slightest error, such as removing the cap too soon or accidentally perforating the plastic, the concoction can explode, searing flesh and causing permanent disfigurement, blindness or even death.

A survey of key hospitals in America’s most-active meth states showed that up to a third of patients in some burns units were hurt while making meth, and most were uninsured.

But of course meth is just one of the highly addictive drugs that are plaguing our youth.  There are many other nightmarish drugs that could also be discussed.  Nearly every community in America is dealing with some sort of a drug problem, and despite the “war on drugs” this crisis just seems to keep getting worse every single year.

Perhaps even more alarming is the rise of human trafficking in America.

When I was going through school, I was taught that slavery had been abolished in the United States.

But that was a lie.

Right now, thousands upon thousands of Americans are living as slaves.  Most of them are sex slaves.  As you read this, there are women all over America that are literally chained to beds in dark rooms where men pay their “owners” to have sex with them.

The following stats about human trafficking come from a recent Detroit Free Press article….

• Human trafficking is a $32-billion industry worldwide.

• Up to 2 million people are trafficked worldwide every year. Of those, 15,000-18,000 are in the U.S.

• Eight in 10 human trafficking cases involve the sex industry; the others involve labor trafficking.

• In 2010, 2,515 human trafficking cases were under investigation in the U.S.

• Eighty-three percent of victims in confirmed sex trafficking cases in the U.S. in 2010 were American citizens

Many Americans would be absolutely horrified to learn what goes on behind closed doors in America.

All over the nation tonight, vicious monsters will be selling or “renting” young children to other vicious monsters for sex.

The following story of one human trafficking victim comes from a recent Fox News article….

Today, Keisha Head is a wife and mother of three. But more than decade ago, she was the victim of a notorious human trafficker.

At 16-years old, Head says she was being sold on the streets of Atlanta for sex.

“I did not know that a normal, average man who was a preacher, who was a lawyer, who was a senator – could turn into this monster,” Head said. “That is the scariest moment when you are amongst people who claim to be normal yet they purchase you and they turn into these monsters. They rape you. They beat you. And then act as if they’re normal. These are not your normal pedophiles.”

When you push morality out of the schools and out of public life, this is the kind of thing that starts happening.

Thousands upon thousands of other women “work for themselves” on the streets of America.  Some are willing to let strangers have sex with them for next to nothing.

For example, one woman in Los Angeles was recently arrested for approaching customers at one McDonald’s and offering sexual favors in exchange for Chicken McNuggets.

A lot of really weird stuff happens in America after dark.

As the economy has crumbled, thieves all over the country have become increasingly bold and increasingly desperate.

The following are just a few recent examples….

*In Fresno, California the damage caused by thieves stealing copper wire from city street lights is costing the city approximately $50,000 a month.  So far, about 2,500 street lights have been stripped of their wiring.

*In northern Alabama, one group of crooks has been using a forklift to pull entire ATM machines out of the ground.

*A while back, a team of ambitious thieves in Pennsylvania actually stole an entire 50 foot long bridge.

Other crimes are committed by members of the government.  In Chicago, the bodies of poor people that don’t have enough money to bury themselves are being treated with absolutely no respect at all by government officials.  Just check out what Cook County Sheriff Tom Dart says that he found….

“Babies are buried 10, 15 to a box.  They’re buried in there with animal remains.  They’re buried in there with arms and legs from body parts they found during the course of the year.  It is not anything that our county or society should ever sit there and say is acceptable”

Can you imagine that?

What kind of a monster would do such a thing?

Of course I could go on for ages about the sick corruption of our government officials, but that will have to be left for another day.

For now, I want to focus on another rising problem in our society.  As I wrote about the other day, the FBI says that there are now 1.4 million gang members living inside the United States.  That number has risen by an astounding 40 percent since 2009.

Nearly every major U.S. city has areas that are essentially “owned” by gangs.  Some of these gangs are the size of small armies.  For example, it is estimated that the Latin Kings have 18,000 members in the city of Chicago alone.

When civil unrest erupts in America, these organized groups of criminal predators will have a field day.  Even now, law enforcement authorities in many areas of the country are having an incredibly difficult time trying to contain them.

As things fall apart all around us, an increasing number of Americans are coming to the realization that they are not going to be able to depend on someone else to defend themselves and their families.

Perhaps that is why the American people stocked up on firearms at an astounding rate during 2011.

In some areas of the country, a firefight can potentially erupt just about at any time.  The following is from an article that was recently posted on standwitharizona.com….

Barbed wire fencing doesn’t keep illegal aliens off the property anymore. One Starr County, TX rancher doesn’t have time to worry about the illegals these days. He now worries about the smugglers protecting their loads.

“I don’t think they would have any conscience of taking someone’s life,” the rancher says.

He saw that will to kill firsthand. A smuggler shot at him on his own land.

“One round was fired at me, and it missed my head by about two feet,” says the rancher.

He says there’s only way to react.

“Fire all the rounds you have, reload, and do it again,” says the rancher.

We don’t do ourselves any favors by pretending that America is going to somehow turn around and become the safe, friendly place that it used to be.

There are millions of criminal predators in this country today that have little or no conscience.  They don’t care about you, your spouse or your children.  All they care about is feeding their addictions.

In the months and years to come, the economy is going to get worse.  As it does, all of those predators are going to become even more desperate.

Desperate people do desperate things.

America is going to become a very frightening place.  But instead of curling up into a ball and crying about it, the better response is to be strong and courageous and to get prepared the best that you can.

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