Neither Fed or ECB has any solution. QE1, QE2, LTRO1, and LTRO2 all are failure then why launch LTRO3 or QE3 ?

Global Central Banker Balance Sheet - Economy stalled
because of  increase balance sheet.

Today Super Mario saved Euro from crashing below 1.20 and brought Spanish 10 year yield below 7.62 % to 6.92%. All he did was to talk about doing something, but what, when and how much was completely missing. But, does this crazy market care about it ? The answer is No. Dow was up 251 point and S&P500 25 point at the peak.


Now the focus shifts to tomorrow US GDP number which is expected to fall from 1.9% to 1.2% which could be lowest in 1 year. Whatever is the outcome, market will hope for easing and it will be 7 straight month of QE3 expectation. 




The magic word stimulus, bailout, QE1, QE2, LTRO1, and LTRO2 has done nothing, so why even think of QE3 or LTRO3 ? If Fed and ECB really had the magic wand, it would have spelled the magic 4 year back and done the trick. But the answer is the Fed and ECB has no real solution and whatever they have done hasn't worked. Whether they do QE3, LTRO3 or QE infinity or carry another twist of operation twist, or its not going to work. A small child will never learn to walk, unless it falls and that's how economy should be. Let it stabilize itself and let it grow on its own. Printing more money into system doesn't create new money.  

Fed and ECB balance sheet and S&P500

The relation between stock market and economy has completely changed. If an economy is growing then output will be increasing and most firms should be experiencing increased profitability. This higher profit makes the company shares more attractive – they can give bigger dividends to shareholders.

If the economy is forecast to enter into a recession, then stock markets will generally fall. This is because a recession means lower profits, less dividends and even the prospect of firms going bankrupt, which would be disastrous for shareholders and this is what we keep hearing from all the companies earning report. 

This days stock market is rallying because it reflects the expectation of "Free money printing or Easing" by Global Central Bankers. If economic condition get worse, "free money" will come into market and stock market rises. If economic condition gets better, then there will in rise in interest rate which leads to sell off because big institution will need to pay more on interest rate and their profit will fall and that's why stock market will fall. 

US debt ceiling about to burst.

Economist keep saying US is out of recession, but the fact is it never felt as if US ever came out of recession. The current stock market is a bubble created by Fed and ECB money printing work and they are the biggest problem which is stopping the economy from growing. Both needs to rethink what they are doing and what they are suppose to do legally.