Did the Federal Reserve Admit a Demand Side Fail With "Operation Twist"? ?

polifrog




Bernanke said: "there are significant downside risks to the economic outlook.", while offering to do little... "Operation Twist". The calculus? The Fed has shot its wad...

Our Keynesian bulwark against depression has been over run. There is a wave of demand side fail coming our way. Do you plan to ride, duck under or be caught in the froth?

Reuters:

Britain's leading shares were sharply lower across the board on Thursday, tracking hefty falls on Wall Street and in Asia after the U.S. Federal Reserve gave a downbeat assessment of the economy, saying it faced "significant downside risks".

The Fed's cautious comments came as it, as expected, unveiled fresh economic stimulus measures, dubbed "Operation Twist" by the financial markets, which will see it buy more long-term Treasury securities in an effort to lower borrowing rates.

"Investors are sceptical that forcing down long term rates will spur activity in the stagnant housing sector as the problem seems to lie in prospective home buyers not being able to obtain the necessary borrowing. This is exacerbated by the banks' cautiousness to lend due to the dire unemployment situation," said Jordan Lambert, a trader at Spreadex.

Graham Summers:

We’re just getting started here. Today we got a confirmed SELL on my proprietary Crash indicator. This is the SAME indicator that registered before the 1987 Crash, the Tech Crash, and the 2008 collapse.

It's just triggered again... which means that today's sell off is JUST the beginning of what's coming. Indeed, I fully believe that the Great Collapse, the time when the Fed completely loses control of the markets, has arrived.

Karl Denninger:

I'll go ahead and make the prediction now: This time will be worse than 2008 and we'll measure from SPX 1370, which makes the minimum downside target under 600. And no, this time it won't recover with more "hopium" and fraud - that card has already been played which means the pension funds and annuities across this nation are going to get, exactly as I warned about four years ago.

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