Via email, the chief economist for Saxo Bank in Denmark, Steen Jakobsen, discusses the "Saturation Point" for QE and the "Fiscal Cliff" in the US.

Steen writes ...


Fiscal Cliff Comparisons

  • A lot of people are starting to compare 2012 with 1987. Yes, it's scary.
  • Other people compare the fiscal cliff to 1937 Roosevelt where stock market tanked 50%.
  • Few people seems to realize that part of the "fiscal cliff" involved higher taxes on financial transactions, meaning it's prudent to take your profit and pay the tax in 2012.
  • Greece is doomed. A headline today read : Soros to invest substantial amount in Greece - He did the same in Russia in 1998 - just before they defaulted.
  • All EU solutions on the table: banking union regulation probably needs treaty changes - we are at the end of line.
2
1
View Full Article
Mike Shedlock

Mike Shedlock

Mike Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management.

Most Recent Articles

Join the Debate
9 Comments So Far
Blair31 Wrote: Nov 10, 2012 8:48 PM
Good. This is what the Obamistas voted for. They're takers. We're the makers. They won. We lost. Do I care? I pretended to. I don't now. I've voted in my last Venezuelan-style election. VIVA OBAMA!
Flag as Offensive
Chuck864 Wrote: Nov 10, 2012 10:39 AM
From what I understand, QE is currently functioning on a monthly basis of $41B with no sunset put in place. Those banks considered "too big to fail" (they) are giving up their toxic debt for cash. This increases their reserves. The FED is also bailing out the U.S. Treasury with purchases of T-Bill, Notes, and Bonds. This is keeping the government going. But the big banks are flush with cash and have a damper put on lending via the Frank/Dodd legislation. So what do they do with the money? They buy assets, some of which are stock market oriented. This is why the markets have remained high. The money trail for the stock market leads back through the banks to the FED.
Flag as Offensive
SMyles Wrote: Nov 10, 2012 8:09 PM
Nothing to see here...Move along.
Flag as Offensive
johnm h Wrote: Nov 10, 2012 9:38 AM
When Soros invests in shaky economies, he invests borrowed funds, then he pays back his loans with devalued currency. This means he would have to invest funds borrowed in Greece but those are also Euros. To know what he is up to we must know what funds he is investing. Is he targeting the Euro or the dollar? or is he picking up real assets because he thinks Greece will survive as part of the Euro?
Flag as Offensive
Greg1084 Wrote: Nov 10, 2012 9:58 AM
He may just be purchasing assets at bargain basement prices planning to sell when things settle out. The thing that puzzles me is that I don't think Greece has really hit bottom. Maybe he thinks it has. He probably has inside information on what is going to happen next.
Flag as Offensive
johnm h Wrote: Nov 10, 2012 10:08 AM
If he's investing his own money probably so on both, bargain prices and inside information. My view has been that we don't face a fiscal cliff and rapid devaluation of the dollar for years, but if Soros is borrowing dollars he may see a more rapid decline of the dollar. He has certainly been working for it.
Flag as Offensive
Chris from Kalifornia Wrote: Nov 10, 2012 9:02 AM
Democrats have gone full socialist. Republicans appear to be democrat lite. Here's a real alternative third party which I hope will become the second party soon.

http://www.constitutionparty.com/
Flag as Offensive
GeorgeWashington1796 Wrote: Nov 10, 2012 3:47 AM
Are you interested in finding out how the political/media system operates? Are you interested in the Constitution, Federalist Papers, & other resources relating to the Founding Fathers?

Check out (see below):

www.constitutionliberty. com

Sign up for the Newsletter!

Thanks.
Flag as Offensive
New comments on this article - click to refresh