Weekend reading:
Doug Noland'sCredit Bubble Bulletin on the market perception of backstopping speculation:
It’s been my view that the power of QE2 was not so much with the $600bn. It was, instead, that the Fed was right there guaranteeing more than ample marketplace liquidity .... And why not speculate on risk assets, assured that central bankers would be quick to bolster the markets at the first sign of trouble? ...bolstering a powerful Monetary Process now deeply entrenched in traders’ psyche. Why not just ignore risk and speculate, emboldened by the reality that systemic fragilities ensure a potent punchbowl filled to the brim. QE2 was one more in an ongoing series of mistakes by our central bank.
But there may be an end to this crap as pointed out in Zerohedge
The Dirty Secret of the Debt Ceiling Debate: Nobody Wants Treasuries
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