Wednesday, March 28, 2012

QE-3 is coming soon and death of dollar is sure---By Shan Saeed

When I shared with people last year that Ben Bernanke will go for the third round of quantitative easing soon,

investors thought, OOOOOOO, Shan you were kidding. Look US Dollar was getting stable. I said NO to few INVESTORS and people. My last 2 predictions would hit the wall soon apart from many others that I have made previously. Read this carefully:


1. US Debt is a Bubble that will bust very soon. Standing at $ 15. 5 trillion. Higher than GDP size $15.1 trillion. US debt will cross $19 trillion in the next 2-years. You bet

2. US Dollar is a bubble and will crash people. You cant fix the economy by printing money. Printing money adds poison for the economy in the shape of INFLATION. US economy is suffering from huge inflation that would hit the household badly. It would be severe than great depression of 1930s. US dollar has lost 98% of its value against Gold since 1913. According to Sam Zell the billionaire real estate investor and my uni of chicago alumni, Living standards of an average american has gone down by 50% since 1986. This is scary.

Federal Reserve will probably signal it plans to arrange a third round of debt purchases when policy makers meet in April. The end of tax breaks enacted by President George W. Bush and $1 trillion of mandatory federal budget cuts are raising concern that declining unemployment will give way to slower economic growth that requires support from the central bank. Policy makers under Chairman Ben S. Bernanke have purchased $2.3 trillion of Treasuries and mortgage debt in two rounds of so- called quantitative easing, known as QE1 and QE2, as they try to sustain the expansion. The Fed is “likely to hint” at QE3 at its April 25 gathering. This hit the dollar even harder. US economy is not growing but declining to the abyss of nowhere.

Federal Reserve chairman is a Helicopter.

The only think he knows is printing money. He will destroy the US economy, crash dollar and kill the household saving for the savvy americans. Be prepared for the worst to come. In the last week, many members of the FOMC argued in favor of ending any form of QE, citing rising inflation expectations. Ben Bernanke said No , we need more printing of money since he is hiding facts. He is not sharing the true picture of the US economy to the whole world, leave alone the american public. According to Ben Bernanke, The printing presses are still on and another edition of QE is coming.

How will the market take this? Will it embrace risk assets (stocks) because more money printing is coming or will it worry that the Federal Reserve is going too far and inflation is coming back?

I fear the latter. As I have pointed out many times before, traders now have a better grasp on the effect of QE on the markets. My analysis of History of QE in the last 5 years.

Stocks peaked seven weeks after QE1 ended (the market was slow to understand QE)
Stocks wised up and peaked three weeks before QE2 ended

Following this pattern, I have argued that this time stocks will peak on the announcement of QE3. Is the hope of QE3 one of the supporting reasons the S&P is up 11% YTD? In other words, has the market already experienced the QE3 rally [buy the rumor] and will its announcement mark a peak in risk assets (sell the news)? If I were correct that stocks (risk assets) fail to advance on more QE, inflation fears would be cited as the reason.

According to WALL STREET PAPER ON WEDNESDAY I.E. 28TH March-2012

The Federal Reserve is propping up the entire U.S. economy by buying 61 percent of the government debt issued by the Treasury Department, a trend that cannot last, Lawrence Goodman, a former Treasury official and current president of the Center for Financial Stability, writes in a Wall Street Journal opinion article published Wednesday. He adds further last year the Fed purchased a stunning 61 percent of the total net Treasury issuance, up from negligible amounts prior to the 2008 financial crisis, He has warned that U.S. economy and markets are “at risk for a sharp correction” if conditions aren’t “normalized.”. I have proved my point again. US dollar is dead and dead dollars dont bounce back. Money from heaven is a hell path for the economy.

Disclaimer: This is just a research report and not an investment advice. All financial transactions carry a RISK.

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