Here COMES QE 3, with MANY more to follow!

Well folks the giant trickery of the FED’s latest proposals is the US equivalent of the EU’s BbBDBB (Bad debts of the Bad Bets of the Bad Banksters) being transferred to their BDST’s, (Bad Debts of the Stupid Taxpayers) covered in many of these Blogs in November.  (See the Polestar Acronym Lexicon on the bottom of our Homepage for complete list of handy acronyms)

It’s really that simple. 

The FED is going to buy Hundreds of Billions more of the US Bankster’s stupid bets gone BAD and relieve them of the financial pain of being forced to absorb their own losses, because it would bankrupt them if they did.  Then they would have to go and get real jobs, and that would be unfair to them. 

So, of course, we can’t expect the stupid and greedy Banksters to pay the price for their greed in the 2003 to 2007 period.  Oh no, we will force the Bankster’s losses on the taxpayers here in the US, just as WILL the BdBBBB's losses on the Sovereign debts of the European Banksters be forced on the BDST's of Europe after Merkel has suborned, gutted and subverted the intent of the German Republic's constitution and forced the German Nation to fund all the bad debts of the GIIPS and all other nations of the failed EU monetary experiment, which Union will then be miraculously transformed by a new fiscal union of the EU that will thenceforth be know as the European Union of States (EUS). 

That evilly crafted charade of Merkel's, which defrauds the German Nation, will then set up the "Surprise that should be NO Surprise" in the June to September period of this year and that will set up the "Great Deception of 2012!" (See all our Blogs explaining these things on 11/18, 21, 28, 12/9 & 1/4/12)

As you read the following entire article (much "White Noise" excised) to the bitter end, it will become clear that Hundreds and Hundreds of Billions of Dollars worth of the FED’s next QE (Quantitative Easing) and the many QE’s to follow will be dumped on the US taxpayers via the following process. The ultimate total QE’s absorption of the BbBDBB problem should eventually equal about $5,500,000,000,000 so as to the clear the vaporized RE “Bubble” equity (that no longer exists) from the Banks and subsequently to the BDST’s.

So folks, here follows the end game that you will read about in 2016-2019:

First, the FED buys the BbBDBB and holds them sterilized (a lie) on their Balance Sheet until they can offload them in the coming upturn,

Second, everyone, including the FED, is entirely swamped in the second of the Tsunami Super “Kondratieff” Long-Waves in 2013-2015, and there is NO upturn and there do develop NO takers for the BbBDBB on the FED’s Balance Sheet,

So?

Third, the FED discounts and then offloads them to the then resuscitated Freddie/Fannie pack of idiots or directly to the Treasury in the 2017-19 time frame, which REALLY kicks in the “Inflationary surge,” BIG TIME!

The author of the following article suggests that the ONLY danger, projected herein, is that interest rates MAY rise 3 points (highlighted in EXTRA LARGE FONT at end of following article) in the next ten years, which would hamper their holding these toxic junk bets of the BB.
 
NOW, mark our words well!  

Within the next 6 years, interest rates WILL ABSOLUTELY rise more than 10 points - and VERY probably 13 points!  At which point ALL those swimming naked  including the FED and ALL their Member Banks WILL be exposed as moral and intellectual NUDISTS!

Are you and your company ready for these things?  They are a few years out and you should be gearing up for the “Great Deception of 2012” first anyway and what will follow that charade.

Bernanke Doubles Down on Fed Mortgage Bet

Bloomberg; By Jody Shenn - Jan 11, 2012 12:00 AM ET

“Ben S. Bernanke is signaling his willingness to double down on a three-year bet that’s failed to revive housing, showing the extent of the Federal Reserve chairman’s effort to wrest a recovery from the deepest recession.

Since the Fed started buying $1.25 trillion of mortgage bonds in January 2009, the value of U.S. housing has fallen 4.1 percent, and is down 32 percent from its 2006 peak, according to an S&P/Case-Shiller index. The central bank is poised to buy about $200 billion this year, or more than 20 percent of new loans, as it reinvests debt that’s being paid off. Some Fed officials have said they may support additional purchases that Barclays Capital estimates could total as much as $750 billion.

… “They’re definitely frustrated and disappointed,” said Stephen Stanley, chief economist at Pierpont Securities LLC and a former Federal Reserve Bank of Richmond researcher. “I’m sure they would have anticipated they would have gotten more bang for their buck.”

While the Fed has helped push mortgage rates to record lows of less than 4 percent, home-loan borrowing in 2012 is forecast to decline to the least in 15 years. Americans who might refinance and buy properties are getting shut out by stricter lending standards or avoiding transactions as values tumble amid mounting foreclosures, according to the Fed study.

…At the same time, the central bank’s purchases of mortgage bonds with yields at record lows is increasing the risk of eventual losses for the Fed, said Anthony B. Sanders, a professor of real-estate finance at George Mason University

…The Fed has taken unprecedented steps to lower borrowing costs as it held short-term interest rates near zero since 2008. It acquired $1.25 trillion of government-backed mortgage securities and $172 billion of federal agency bonds from December 2008 through March 2010, as part of a process known as quantitative easing, or QE. It embarked on a second stage involving $600 billion of Treasuries through last June.

QE3 Likelihood

In October, it began recycling proceeds from the mortgage and agency debt into home-loan securities, buying $80.2 billion through Jan. 4. Reinvestment will probably total about $200 billion this year, according to Barclays, JPMorgan Chase & Co. and Credit Suisse Group AG.

Dudley’s comments and the Fed study signal a greater likelihood of QE3, according to Ajay Rajadhyaksha, a Barclays analyst in New York, who has estimated it could involve $500 billion to $750 billion of mortgage-bond purchases over a year.

“The investment community is almost regarding quantitative easing as a free good and if it’s a free good, why not just do QE10,000,” said Sanders, a former head of mortgage-bond research at Deutsche Bank AG. “If rates start going up, somebody’s going to have to pay the tab, and you know who that is: John Q. Public.”

…Monetary policy hasn’t been enough to prevent house prices from continuing their more than five-year long slide, with Pacific Investment Management Co.’s Scott Simon, the bond manager’s mortgage head, forecasting further declines of 6 percent to 8 percent.

….While the Fed has pledged to hold short-term rates near zero through mid-2013, George Goncalves, head of interest-rate strategy at Nomura Holdings Inc. in New York, says he can envision its target rate reaching 3 percent by 2017.

“The good news” is that the Fed pays zero percent on about 40 percent of its liabilities because it can print money, said Doug Dachille, chief executive officer of First Principles Capital Management LLC in New York, which oversees $8 billion.

The projected average lives of Fannie Mae-guaranteed securities with 3.5 percent coupons, which accounted for the largest portion of the Fed’s purchases last week, would extend from 5.2 years to 10.8 years if rates rose 3 percentage points, according to data compiled by Bloomberg. That means the central bank could be stuck with them for longer and their value would drop more with further increases in interest rates.

‘No Confusion’

“Rates go up, and you’re going to see a pretty significant level of extension in terms of the duration and meaningful book losses residing on the Fed’s balance sheet,” said Jason Callan, head of structured products at Columbia Management Investment Advisers LLC, a Minneapolis-based firm overseeing $170 billion in fixed-income. “That’s kind of the name of the game in mortgages.” …”