End Of QE2 Has Some Investors Fearing Fall In June

[Purveyor]

(04-17) 11:32 PDT NEW YORK, (AP) --

Could the financial markets be heading for a June swoon?

The answer likely hinges on what happens after the Federal Reserve's $600 billion effort to boost the economy expires. Some investors warn that the end of the program, known as QE2, will upend the stock market and push other markets in unexpected directions.

Under QE2, the Fed buys Treasurys from investors who can then put the money in stocks and other investments. Economists call it quantitative easing, and it is the second time the Fed has used the tactic.

Since last August, when Fed Chairman Ben Bernanke outlined the plan, the Standard & Poor's 500 index has gained 26 percent. Many also say it's partly to blame for rising commodity prices on everything from silver to cotton.

"It's the most important factor that explains markets the way they are now," says David Rolley, co-head of global fixed income at the fund manager Loomis Sayles. "So the most important question is what happens when QE2 stops?"

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http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2011/04/17/national/a113256D37.DTL

[dkf]

1. Get ready folks...this could be a bumpy ride.

[xchrom]

2. If things go south the experts will be surprised.

And if they don't - they'll take credit.

Which is taking the long way round to say - nobody seems to know what they are doing.

[leveymg]

3. Bernanke: to deal with a collapsed bubble, inflate another, and another, and so on . . .

Who cares if the economy is more patch than balloon, and the systemic causes of collapse (deindustrialization, shrinking real wages, unemployment and underemployment, excessive risk-taking with other people's money, and "Pangloss value"(bubbles markets due to expectation of bail-outs)) are never dealt with.

[upi402]

9. Well put

Makes sense even to me!
Seems like trade laws need reinstating before unemployment, consumer demand, and lending to return. But after watching the shell game on cable news - nothing will happen unless we have real journalism that rats out the rats.

More patch than balloon, but plenty of hot air to float that dog.

[golfguru]

4. End the 3 wars now, and stop the bleeding of resources n/t

[Purveyor]

5. I think the real '3rd rail' is the Pentagon budget, not social security or medicare. eom

[CanonRay]

6. QE3...QE4...QE5...

for as long as the rich can bleed money from the middle class.

[Thurifer]

7. Both left and right hate the Fed, so why is it here?

The Fed is the textbook definition of a Fascist economic entity. What infuriates me is that why if both Populist Left and the Tea Party Right hate it why do we allow the Mushy Middle keep it around?

[golfguru]

8. Because no one really understands the Fed

It has no congressional oversight, no audit. It operates in secrecy.