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US: Operation "Twist" made public
  • Vitaliy_KiselevVitaliy_Kiselev
    More details at:
    http://www.businessweek.com/news/2011-09-21/treasury-yield-falls-to-record-on-fed-bond-purchase-twist-.html


    Idea is old and had been used for long already.
    It is even called "stimulus" measure.
    But at current 10y and 30y rates it just looks extremely strage.
    Real goals of such measure are as follows:
    1) Problem to sell long bonds to central banks of other countries. So, FED needs to buy them.
    2) Short rates are almost zero, so no big harm will do done here in short term.
    3) As I wrote previously, real target now are bond rates.
    FED moved to play wth them leaving high valatility on the markets.
    With time it'll make exactly the opposite, stability will be gradually decreasing.
  • 9 Replies sorted by
  • stoneystoney
    For now, fed seems worrying about deflation.
  • Vitaliy_KiselevVitaliy_Kiselev
    >For now, fed seems worrying about deflation.

    Nope. All they are worry about is injecting money and holding bond rates at the same time.

    As you can see, high volatility is present both on all stock markets and on Forex.
  • GOODEMPIREGOODEMPIRE
    Seems like there is no difference between Bernanke2011 and Kirienke1998
  • Vitaliy_KiselevVitaliy_Kiselev
    @GOODEMPIRE

    In fact, difference is quite astonishing :-)
    I do not see big strategic flaws in Bernanke measures.
  • GOODEMPIREGOODEMPIRE
    @ Vitaliy_Kiselev I guess this "With time it'll make exactly the opposite, stability will be gradually decreasing." and this "I do not see big strategic flaws in Bernanke measures" make sense only if we assume that more instability is the goal. With that I fully agree. If only Kirienko could have bombed Libya, he might have had a "strategic vision" too.
  • Vitaliy_KiselevVitaliy_Kiselev
    >if we assume that more instability is the goal

    No, overall instability is not the goal, but it looks to be inevitable.
    As you have natural constrains. So, Bernanke now acts assuming real situation.
    So, even if FED will do all very good and right it do not mean that something will improve.
    It'll just degrate more slowly :-)

    Kirienko just followed some simple instructions and never had been an author of whole scheme and even not overlooked it's execution.
  • GOODEMPIREGOODEMPIRE
    @ Vitaliy_Kiselev "It'll just degrate more slowly" At this moment it's really hard to measure the pace of Titanic's sinking. What is visible though is the growing number of homeless people begging in the subway. Personally I don't think trading short term explosives for long-term explosives makes any difference. The multi-trillion dollar pyramid of toxic waste is ready to go down at any moment. A little CDS crisis over someone's default in Europe will trigger the nuclear bomb. It was very wise on Greenspan's side to resign in 2006. My heart goes out to Bernanke.
  • Vitaliy_KiselevVitaliy_Kiselev
    >It was very wise on Greenspan's side to resign in 2006. My heart goes out to Bernanke.

    Both are just public figures with little influence.

    >Personally I don't think trading short term explosives for long-term explosives makes any difference.

    It makes big difference.
    As whole goal is to keep control.
    Any uncontrollable sharp turn could induce big problems to elites.
  • GOODEMPIREGOODEMPIRE
    Nop. It actually gives almost no relief as we saw it today. Overall government bonds are not the core issue today if compared to the 600 trln cds and other derivatives bubble. As for greenspan, it's not about his power to affect the market, but about who is going to be called responsible for the upcoming nightmare. Greenspan was one of the architects of the derivatives market, he made it possible to repeal glass-st under clinton so 2006 was the perfect time for him to sneak out. And of course everyone in "the elite" knew what was going to happen. I actually interviewed greenspan's vice back then and his exact words were "something is about to happen, but not tomorrow". Now tomorrow has come. The funny thing is that commodity prices r in freefall to, so the Russian capitalist government much admired by the aftershock livejournal crew of conspiracy theorists are going to be right at the epicenter. Historic changes are coming:) I n e v I t a b l y
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