Last summer financial markets looked decidedly queasy until the Fed announced its QE2 program to keep interest rates low by buying up its own bond issues. It did not actually start until November but the magic recovery in markets from correction mode began as soon as it was announced in August.
Can the Ben Bernanke Fed produce a similar rabbit out of the hat this year? And do we have to take the pain before August again? It is no wonder stocks are feeling a bit sick right now, quite apart from the lousy economic fundamentals that show the economic recovery to have been largely waffle from Wall Street.
It is of course harder to make a case for QE3 while we are so clearly beginning to suffer from the inflation created by QE2. The Fed is still in a state of denial over this but where else can inflation be coming from with the economy so weak?
But with a money printer at the Fed you do have to wonder if this might not be a repeat of last year.......read on