QE2 A Bust!

[Kruzen]

http://www.marketwatch.com/story/qe2...ust-2011-05-21

BOSTON (MarketWatch) — It‘s cost $600 billion of your money. And it was supposed to rescue the economy. But has Ben Bernanke’s huge financial stimulus package, known as “Quantitative Easing 2,” actually worked as planned?

QE2 is being wound down in the next few weeks. Fed Chairman Ben Bernanke has said it has left the economy “moving in the right direction.”

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But an analysis of the real numbers tells a very different story.

Turns out the program has created maybe 700,000 full-time jobs — at a cost of around $850,000 each.

House prices are lower than before QE2 was launched. Economic growth is slower. Inflation is higher.

Yes, it’s sparked a massive boom on the stock market. Ordinary investors have started piling back into shares again. And last week we saw the latest example of the return of animal spirits on Wall Street, as stock in new dot-com LinkedIn LNKD -7.75% skyrocketed on its debut. How to cash in on LinkedIn .

But even the stock market boom hasn’t been what it appears. An analysis shows that most of the rise in the Standard & Poor’s 500 Index SPX -1.21% under QE2 has simply been a result of the decline in the dollar in which shares are measured.

The truth? QE2 has created a massive new bubble in dollar-based financial assets, from stocks to gold. Meanwhile, it has had zero visible effect on the real economy.

Take jobs. According to the U.S. Labor Department, since last August the number of full-time workers has gone up by just 700,000, from 111.8 million to 112.5 million.

At a cost of $600 billion, that’s $850,000 a job.

The picture’s even more meager. Over the same period, the number of part-time workers has gone down by 600,000. In other words, we’ve basically shifted 600,000 or 700,000 workers from part-time jobs to full-time jobs.

The percentage of the population in work is actually lower today — 58.4%, compared to 58.5% last August. The percentage of the workforce in actual work, the so-called “participation rate,” has fallen by half a percentage point.

Some recovery.

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April housing starts plummet
April housing starts fell 11%.

Housing is double-dipping. Big time. According to the National Association of Realtors, the average price of an “existing” (i.e. used) home was $177,300 in August, just before QE2.

Today? It’s $163,700 — or 8% less.

Economic growth has slowed. It was 2.6% last summer. It’s a miserable 1.8% now.

Meanwhile inflation has risen, from 1.2% before QE2 to 3.1% now.

Okay, maybe the economy would have been even worse without QE2. But the data do puncture any claim that these economic policies are working as advertized. Economists are now growing more and more gloomy about the outlook ahead. Retailer Gap on Friday became the latest economic bellwether to warn on weak sales and rising costs.

Meanwhile QE2 has created an entirely artificial bubble in all dollar-based assets.

Look at the stock market. Since Aug. 27, when Bernanke unveiled his plan for QE2 in Jackson Hole, Wyo., the S&P 500 has risen by 26%.

So far, so good, right? But it’s an illusion. What’s really happened is a decline in the value of the dollars that the shares are measured in.

Measured in hard currencies, the stock market boom has been much less impressive. In Swiss francs, the S&P has risen by just 8.4% since Aug. 27. In currencies like the Swedish krone and Australian dollars it’s even less. Measured in gold, the S&P 500 is up just 4.5%.

Meanwhile the illusion of a boom is causing all sorts of investors to take crazy risks. Witness LinkedIn’s IPO. Economists from the so-called “Austrian” school say this is a reason to go back to a gold standard. It certainly makes you wonder what’s next.

Discuss?

[mrsleeve]

Duhhhhhh


Wonder why gas is 4 bucks a gallon, food is going up, as is nearly all other commodities. Even Ray fucking Charles could have seen this shit coming

[herbivor]

Duhhhhhh


Wonder why gas is 4 bucks a gallon, food is going up, as is nearly all other commodities. Even Ray fucking Charles could have seen this shit coming

Actually, that has more to do with market speculators pushing up prices so they can sell high, than it does a recession created by loose lending regulations. The system is rigged by the rich and powerful. They want the government to allow a "free" unregulated market to allow for their gains and then have the tax payers socialize their losses.

Stimulus spending is actually a theory supported by most economist and many are touting more spending is necessary to boost job growth, although, that has become politically unpopular, so now the administration will say "see it's working, it would've been worse without it." No one will ever know really.

[mrsleeve]

NO YOU PRINT MORE FUCKING MONEY EACH DOLLAR IS WORTH LESS WHEN WE ARE MONETIZING OUR OWN DEBT

Next OPEC knows what we are doing so they are just raising their prices so they are still getting the same value for their products they were a year ago. So dose anyone else dealing in commodities and hard goods. And we have the feds tellign us we have to use so much ethanol in our cars for fuel that its taking 1/3 the corn crop this year for fuel production, and lots of ground that has been devoted to other crops is going to ethanol corn, there by making goods made from those things sky rocket as well not just corn based goods

Yeah your right TOO BIG TO FAIL IS WRONG, and this is a huge problem and NO govt spending is not the way outta this private sector growth is, you know the real wealth creators.

Why is the stock market going up, up, up, and only having small drops and then back on the up trend when things that should send it doping like a mofo keep happening. you know like the Mid east on fire, European countries falling into default, uber high energy prices, admin announcing programs to make them higher, the list goes on and and on.

WHY cuz the fucking feds keep putting money in the banks hands and they are pumping the stock markets with all that cash making a HUGE bubble markets. More govt spending is not the way out, look to the 30's and the great depression there is a reason it was only referred to as the the great here in the usa. The policies of the FDR admin prolonged it for a good 8 years more than the rest of the world, and we are repeating history right now.

Where there are a few places in the country with booming industry and good paying jobs the feds are trying to shut us down with the EPA and co2 emissions caps and other things. They still have gulf oil production all but shut down, thanks to a defacto regulatory drilling ban

Shits is really on the edge of coming apart, and once OPEC says they are going to take oil trades in something other than the dollar or when the rest of the world starts to drop the dollar as their reserve currency. It will be all over. Look to weimar to see what its going to be like.

Grab your ass people shit is going to get bumpy

[A Sucked Orange]

Actually, that has more to do with market speculators pushing up prices so they can sell high, than it does a recession created by loose lending regulations. The system is rigged by the rich and powerful. They want the government to allow a "free" unregulated market to allow for their gains and then have the tax payers socialize their losses.

Stimulus spending is actually a theory supported by most economist and many are touting more spending is necessary to boost job growth, although, that has become politically unpopular, so now the administration will say "see it's working, it would've been worse without it." No one will ever know really.

Fucking hippies. I cannot wait for collapse and the forced encounter with reality.