25IQ

Q3 Real GDP rose by 2%, right in line with expectations Nominal GDP was better than expected, rising 4.3% vs the estimated gain of 3.8%, the difference being the inflation price deflator which rose 2.3%. Personal Spending, 70% of the figure, rose by 2.6%, .1% better than expected and the best gain since Q4 ’06. It added 1.8 % pts  to GDP.  http://www.ritholtz.com/blog/2010/10/q3-gdp-in-line-but-ordinary/

Mauldin:  “We need about 100,000-125,000 new jobs a month just to keep up with population growth, and a 2% GDP will not give us half that, as we saw last quarter. Most economists say you need about 3.5% GDP growth to get solid job reports. http://www.businessinsider.com/hey-republicans-be-careful-what-you-wish-for-2010-10#ixzz13qzO2Rdn

Delong:  “I’ve been expecting a long, slow, agonizing recovery, in part because there’s little chance that fiscal policy authorities will give the economy the boost it needs to recover faster… full recovery by 2013 is looking optimistic now. I wouldn’t be surprised if it takes even longer than that.

Thoma:  “Positive growth is better than negative growth, but this is a loss relative to trend growth, and the fact the inventories are driving growth is of concern.   http://delong.typepad.com/sdj/2010/10/this-is-not-a-strong-gdp-report.html 

Bill Gross has been wrong before re bonds turning http://www.calculatedriskblog.com/2010/10/update-pimcos-bill-gross-has-called-end.html

“The people who did not get us into trouble are being penalized by getting nothing on their savings.”  http://www.nytimes.com/2010/10/29/business/economy/29norris.html?pagewanted=2

In China growth of 9.6% (recorded in the year to the third quarter) represents a slowdown. China will account for almost a fifth of world growth this year, according to the IMF; at purchasing-power parity, it will account for just over a quarter. http://www.economist.com/node/17363625

The Congressional Budget Office, which produces dry, cautious budget projections, recently reminded Congress that Social Security as a percent of GDP will rise from 5 to 6 percent in 2035 and simply stay at that level for the foreseeable future. In other words, the much decried shortfall amounts to only 1 percent of GDP over three decades. And this may be exaggerated. As some observe, much will depend on the flow of young immigrant workers to America. The more workers contributing to Social Security, the smaller any future deficit will be. And the CBO projections tend to make overly conservative estimates about such immigration in the decades to come. Meanwhile, Federal spending on healthcare—essentially, Medicare and Medicaid—will double from 5 to 10 percent over the same period. http://www.nybooks.com/blogs/nyrblog/2010/oct/29/big-lie-about-social-security/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+nybooks+%28The+New+York+Review+of+Books%29

Gladwell: “An investor like Warren Buffett has to think that he is smarter than the market. Private-equity managers aim higher. They see themselves as smarter than the managers of the companies they are buying. It is not a field for someone with any obvious deficits in self-confidence.”  http://www.newyorker.com/arts/critics/books/2010/11/01/101101crbo_books_gladwell?currentPage=all#ixzz13rgL0Q7D

 Fred Wilson has a post today in which he notes that his firm’s VC returns follow a power law.   http://www.avc.com/a_vc/2010/10/the-fallacy-of-bimodal-returns.html

 This would not have been a surprise to Mandelbrot who spent a lot of time thinking and writing about this issue which was sparked by the work of Pareto in relation to wealth distributions.

The smart people at Sante Fe Institute spend a lot of time thinking and writing about this and I see a lots of output where they essentially say: “Look, another power law!”  For a while spotting the power laws is satisfying but then eventually you are left wanting more.  The obvious question that arises is: what does the existence of these power laws tell us? What does this phenomenon mean?

And why do some things fall into the middle as this new paper argues re text messaging?

“Short Message correspondence that observed human actions are the result of the interplay of three basic ingredients: Poisson initiation of tasks and decision making for task execution in individual humans as well as interaction among individuals. This interplay leads to new types of interevent time distribution, neither completely Poisson nor power-law, but a bimodal combination of them.” http://www.pnas.org/content/early/2010/10/14/1013140107

One thesis seems is that preferential attachment is a driver. That’s somewhat satisfying as an explanation, but predicting what will attach in a preferential way is problematic. You may know preferential attachment will happen, but how it will happen?  

I have a friend who said some kinds things about me and I obtained a few new followers on Twitter/my blog but it seems far to late for me to break into the econo-bloging pantheon. Being late to market makes it super hard to create preferential attachment since people’s time to read is limited and there are so many strong blogs already. The people writing for the Awl are trying to solve the problem with brute force, which probably means they have no life left over after the effort. This barrier to entry can be seen in many forms as ”success begets success” (e.g., we are seeing such a phenomenon right now as the hedge fund world undergoes a mass extinction where the rich gets richer).  

“Money begets money,” said Balter, who farms out money to hedge funds. “If an investor sees other large investors flocking to a fund, then the perception is that his decision to invest is validated.”  http://www.bloomberg.com/news/2010-10-29/-must-have-hedge-funds-attract-fifth-of-new-cash-for-och-o-shea-singer.html

Nassim Taleb seems to say, in his unique/convoluted/arrogant/cynical way, that one should be satisfied knowing that there are some things that you cannot know (i.e., unknown unknowns and what Zeckhauser calls “ignorance” are inevitable).    Robert Lucky writes re Taleb:

 ”Taleb…. says that elegant mathematics appeals to mechanistic minds that don’t want to deal with ambiguity, and that to make it fit the real world you have to cheat somewhere in your assumptions. Like maybe the world isn’t filled with additive white Gaussian noise after all. I suppose we’re guilty as charged, but I’d like to offer a mild defense. We do sort of know that the noise probably won’t fit our nice model, but nonetheless all that elegant math does produce designs that are relatively robust against disturbances. Outliers resulting in errors still do occur, of course, but usually their effect is not catastrophic, as it can be in the financial realm, which is Taleb’s bête noire…” http://spectrum.ieee.org/at-work/innovation/black-swans

 Taleb would respond that Lucky’s physics are far less complex than predicting the behavior of humans and it is not just finance that Black Swans create the risk that Mandelbot feared are being underestimated.  

“Physics has been successful, but it is a narrow field of hard science in which we have been successful, and people tend to generalize that success to all science. It would be preferable if we were better at understanding cancer or the (highly nonlinear) weather than the origin of the universe.” http://spectrum.ieee.org/at-work/innovation/black-swans  

What Taleb cautions about does not stop people from talking about things like “economic thermodynamics”  http://www.eoht.info/page/Economic+thermodynamics as physicists try to adapt their tools to economic analysis.

One aspect of this is the question of why some people are rich and some are poor. And the way government policies and philanthropy should deal with the wealth inequality that inevitably results from preferential attachment. This is especially topic at election time.

Looking at how economics results change as groups scale:

While simpler hunter/gatherer societies appear to be rather egalitarian, production of a “surplus” beyond subsistence level immediately seems to lead to a “ranked society” or some kind of “chiefdom” (Angle, 1986, p. 298) http://arxiv.org/PS_cache/cs/pdf/0506/0506092v1.pdf

Why does egalitarianism break down?  One thesis is wealth condensation:  http://en.wikipedia.org/wiki/Wealth_condensation

I have a friend who works on economic development projects in slums and she notes that the poor are much more likely to act as waves and the rich as particles in the quantum sense.  The poor share more and have a greater propensity to share what they have. Actions are more collective in nature.

Would a wealthy person who understands that his or her economic position in life is more due to luck than skill be more likely to give to charitable causes (i.e, what Buffett calls the genetic lottery)? I think so. Mauboussin’s recent writing on luck vs. skill is masterful/majestic. http://www.scribd.com/mobile/documents/34415026  That is not to say that every rich person is not skillful, but rather that they were both skillful and lucky.

After writing the well-known book “Competitive Strategy” which focused on the commercial environment, Harvard Business School Professor Michael Porter moved on to what he called “The Competitive Advantage of Nations,” which is quite applicable to the news re the Chinese supercomputer   http://news.cnet.com/8301-13924_3-20021122-64.html

If supercomputers is a “contest” between two great nations and the architecture is based on a commodity driven design, then China, which has a vastly greater ability to marshal resources for a commodity driven megaproject like this,  will “win.” China is largely a top-down culture much like a giant enterprise business (the opposite of a venture driven community like Silicon Valley).  Getting masses of people to march in a single direction is a Chinese strong point.

A country like the United States should arguably change any supercomputer contest and try to “win” based on design that has some key proprietary elements. In Porter’s taxonomy, this would be a “differentiation” strategy as opposed to a “generic” strategy.

Differentiation in this case involving supercomputers is not a panaceafor the US, but worse would be a head-to-head battle with China based on commodity inputs. 

In this case China has pre-empted a US move to differentiation with:

“Dongarra: The Chinese designed their own interconnect. It’s not commodity. It’s based on chips, based on a router, based on a switch that they produce.” http://news.cnet.com/8301-13924_3-20021122-64.html#ixzz13j5tStp7

But that does not mean that a “generic” cost-based strategy makes sense for the US.

The analogy here would be solar cells. In a commodity battle, Chinese manufacturers have a huge advantage.  http://www.nytimes.com/2010/10/13/business/energy-environment/13solar.html?_r=2&ref=todayspaper  So US makers must differentiate.

As Charlie Munger once said:

“At Berkshire Hathaway we do not like to compete against Chinese manufacturers.”  http://www.25iq.com/charlie-munger-quotations/

PIMCO’s Bill Gross Tweets twice:

1. “Quantitative easing isn’t a be-all end-all solution, but an adrenalin shot aimed at raising asset prices & rejuvenating the economy.”
2. “One aim of quantitative easing is to elevate real growth, adding some – not a lot – of jobs & expanding the economy structurally.”

Why then is PIMCO’s Bill Gross saying in his most recent letter that the Fed complicit in a Ponzi scheme? http://www.pimco.com/Pages/RunTurkeyRun.aspx  If you read it carefully you will see that the letter is mostly directed at the US deficit and the FED is bashed as an enabler.     

Voters have Obama in a box.  Not to talk an austerity game, is political suicide.

Why? Voters do not understand the paradox of thrift. They think the economy is like a family and when you are in trouble due to debt you spend less and save more. But on a macro basis if everyone does that, the economy tanks.  That you need a stimulus when the economy is in trouble due to too much debt is counterintuitive and thus a phenomenon like the Tea Party is possible.

Of course, the way Geithner let certain people escape pain in the bailout poisoned the well for government.  Yes, the banks need to be saved.  No, not the way Geithner did it.  

The economy needs stimulus if unemployment is to fall. The deficit needs to be cut – by a lot.  But not right now. Congress is afraid to act now.  As a result, the only player with guns capable of firing is the FED.  It’s hard to blame some people though who think that letting the spending happen now won’t be tied to BIG deficit reduction (which means real pain) later.   How you come out on this depends a lot on whether you and people close to you have a job right now.  People aren’t firing as much but they are not hiring enough people either.

TIPS make sense right now.  And very high quality dividend stocks.  Getting out of bonds may be a crowded trade faster than people imagine.  It’s always that way but people think they will be smart enough to get out first.

Re cutting a deficit, what Britain is doing is a major experiment that will be interesting to watch.   Delong:

“… Prime Minister David Cameron’s administration is about to embark on what may be the largest sustained fiscal contraction ever: a plan to shrink the government budget deficit by 9% of GDP over the next four years. …”  http://www.project-syndicate.org/commentary/delong107/English 

Thoma:

“… As I noted yesterday, my worry is that the outcome of the midterm elections will make it more likely that we’ll catch the austerity bug and begin trying to balance the budget before the economy is ready. http://economistsview.typepad.com/economistsview/2010/10/delong-the-humiliation-of-britain.html

 stocks since 1871 http://dlvr.it/7dD3B

Most pension funds and 401(k) calculators assume total returns in the 7–8% range, and sometimes a bit higher. And yet, stocks and bonds—the two pillars for most investor portfolios—are expected to return 5.2% and 2.5%, respectively. Indeed, the return on the classic 60/40 blend of the two is not even 4.5%. With an approximate 3% differential, we have a stark disconnect between these simple “building block” estimates and “required” return rates.  http://www.indexuniverse.com/sections/features/8323-hope-is-not-a-strategy.html

bill gross 

•We are in a “liquidity trap,” where interest rates or trillions in asset purchases may not stimulate borrowing or lending because consumer demand is just not there.

•The Fed’s announcement will likely signify the end of a great 30-year bull market in bonds and the necessity for bond managers and, yes, equity managers to adjust to a new environment.  http://www.pimco.com/Pages/RunTurkeyRun.aspx

Grantham

“… bond prices are currently manipulated, and are yielding less than any market clearing price would suggest. They absolutely do not refl ect the substantial fears in many quarters about inflation in the long term.  Even in less manipulated times, bond prices can be quite silly for the usual behavioral reasons, as demonstrated most clearly by the 15% yield on the 30-year Treasury in 1982!  Bonds are thus emphatically not a reasonable yardstick for measuring value in stocks. … We use the long-term returns for stocks to decide what their fair value is.  They are currently overpriced.  Bonds are even less attractive.  Yet, remember that in a strongly mean-reverting world, you need to be careful about enthusiastically buying the less ugly of two overpriced investments.  Cash has an option value: on the chance that stocks or bonds or, better yet, both, decline, the investor will need resources from which to buy. 

Ridholtz:

“…The EU revised Greek budget deficit above 15% of GDP. In a leading contender for understatement of the year, Finance Minister George Papaconstantinou said the nation had serious tax compliance issues….

 Its hard to see how Greece avoids a Restructuring — which, truth be told, is merely a polite word for Default.The most efficient productive player in Europe is Germany; they benefited the most from the dropping of trade barriers and the replacement of the strong Deutsche Mark with the Euro. (Plus, they absorbed all the cheap labor they needed when they were reunified with East Germany). Selling into the rest of Europe without the drag of a strong currency or any trade barriers has been a boon for Germany. The calculus about any Greek default restructuring is the Moral Hazard threat. If the terms are too easy, it may encourage the remaining PIIGS — Portugal, Italy Ireland Spain — towards default restructuring their debts. I place the survival of the EU in its current form at 50/50 . . .  http://www.ritholtz.com/blog/2010/10/greek-yields-soar/ 

James Hamilton:

What does a negative real rate signify? If you consider a simple one-good economy in which the output is costlessly storable, a negative real rate could never happen– people would simply hoard the good rather than buy such miserable assets. You’re better off storing a can of tuna for a year than messing with T-bills at the moment. But there’s only so much tuna you can use, and many expenditures you might want to save for can’t really be stored in your closet for the next year. It’s perfectly plausible from the point of view of more realistic economic models that we could see negative real interest rates, at least for a while.  http://www.econbrowser.com/archives/2010/10/negative_real_i.html

Kenneth Volpert at  Vanguard : “Don’t fight the Fed because if they want to get inflation higher, they can get inflation higher.”  http://online.wsj.com/article/BT-CO-20101026-715390.html

The bond-buying program is likely to focus on Treasury bonds with maturities mostly between 2-years and 10-years. The Fed could buy even longer-term bonds, though some officials are reluctant to do that aggressively because it could expose them to long-term losses without much added benefit.  http://online.wsj.com/article/SB10001424052702303891804575576533845166848.html?mod=WSJ_hp_MIDDLETopStories

Paul Tudor Jones:   ”As someone who has traded foreign exchange since 1980, I believe the RMB/USD rate is currently the single most important of all exchange rates. It not only drives the largest foreign trade relationship in the world, it also drives virtually every other exchange rate globally. Dozens of other emerging market countries suppress their exchange rate against the US dollar because the RMB is effectively pegged to the dollar. And what is remarkable is the lack of any concrete policy initiative in the US to change this.”  http://www.zerohedge.com/article/deep-thoughts-paul-tudor-jones-sino-us-relationship

The extra yield investors demand to hold global bonds rated CCC or lower instead of government debt is about 10.2 percentage points, or 3.3 percentage points narrower than the average over the past 12 years  http://www.bloomberg.com/news/2010-10-25/fed-induced-junk-rally-makes-riskiest-debt-most-expensive-credit-markets.html

Four US housing indices have released updates since Friday, with three of them showing worrying declines in the months they tracked http://ftalphaville.ft.com/blog/2010/10/26/383461/housing-index-bonanza/

Oct. 25, 2010 – For the fourth quarter in a row, the nation’s top economics bloggers have conveyed a steadily deteriorating view of the U.S. economy in responses to a Ewing Marion Kauffman Foundation survey released today. In the fourth Kauffman Economic Outlook: A Quarterly Survey of Leading Economics Bloggers respondents’ outlook on the U.S. economy is more pessimistic than in any previous quarterly survey in 2010, with 99 percent saying that conditions are mixed, facing recession or in recession. When asked about the probability of a double-dip recession in the United States, the average response is a 41 percent probability; two-fifths see a 20 percent probability, and opinion declines toward higher probabilities. http://www.kauffman.org/newsroom/leading-economic-bloggers-outlook-steadily-declines-but-they-believe-stimulus-package-helped-unemployment.aspx

AMZN’s valuation  http://ycharts.com/analysis/story/1406366893/amazon_everything_grows_but_the_profit_margin

“Never confuse genius with a bull market.”  The gargantuan multi-decade move in interest rates, the fuel used to drive bond prices to the moon, might have something to do with the company’s success too? PIMCO is not exactly selling ice to the Eskimos – many investors are scooping up PIMCO’s bond products as they wait in their bunkers for Armageddon to arrive. …  PIMCO …has not been shy about talking its own book. Subtlety is not a strength of El-Erian – here’s what he had to pimp to the USA Today a few months ago as bond prices were continuing to inflate: “Simply put, investors should own less equities, more bonds, more global investments, more cash and more dry ammunition.”

http://investingcaffeine.com/2010/10/25/pimco-%E2%80%93-the-downhill-marathon-machine/

“… some investors on Monday bought United States government bonds that effectively had a negative rate of return. .. Bizarre as it sounds, that is correct. In an auction of a special kind of five-year Treasury bond, investors paid $105.50 for every $100 of bonds the government sold — agreeing to pay the government for the privilege of lending it money.  … Inflation-protected Treasury securities have already been trading at negative yields on the open market for some time, http://www.nytimes.com/2010/10/26/business/26bond.html?_r=1&ref=business

El-Erian:  “QE on its own means we’ll have the same issues in six to nine months time with the rest of the world being inflated,” El-Erian said. “It will have some benefits but not as much as we’d like. It will have costs and unintended consequences.”  

The difference between yields on 10-year notes and Treasury Inflation Protected Securities, a gauge of trader expectations for consumer prices, widened to 2.18 percentage points, matching the most since May 19.

The Treasury sold $10 billion of five-year Treasury Inflation Protected Securities at a negative yield for the first time at a U.S. debt auction today as investors bet the Fed will be successful in sparking inflation. The securities drew a yield of negative 0.55 percent.  http://www.bloomberg.com/news/2010-10-25/pimco-s-el-erian-says-fed-treasury-purchases-may-disappoint.html

Still Tipsy, still the best  Oct 25

Tips — still the best, apparently.

As we’ve already discussed in some detail, Tips have been attractive investments in the current environment for several reasons: protection against expected inflation, of course, but also against significant deflation and against volatility. http://ftalphaville.ft.com/blog/2010/10/25/382221/still-tipsy-still-the-best/

At the same time, retail investors looking for higher yields in the current low interest-rate environment were targeted by Goldman, which prepared to sell $250m of 50-year bonds that are expected to pay interest of up to 6.25 per cent.

Mr Loeys added: “We are seeing longer-term thinking clients becoming increasingly wary of bonds and hedging against inflation. Shorter-term thinkers are still willing to still buy bonds, on the presumption that they are nimble enough to get out when inflation comes to push yields up.”

said Jan Loeys, head of global asset allocation at JPMorgan Chase. “What no one knows is whether inflation will start to show in two weeks or two years.”

Long-term institutional buyers purchased 39 per cent of the $10bn Tips sale, up from an average share of 30 per cent for the prior six Tips sales.   http://www.ft.com/cms/s/0/dfa5ee7c-e08e-11df-abc1-00144feabdc0.html 

Ten-year yields will end 2010 at 2.5 percent, Goldman predicts, little changed from today’s 2.55 percent.

German Economy Minister Rainer Bruederle “It’s the wrong way to try to prevent or solve problems by adding more liquidity. Excessive, permanent money creation in my opinion is an indirect manipulation of an exchange rate.”  http://www.bloomberg.com/news/2010-10-25/asian-currencies-climb-to-1-week-high-as-g-20-pledge-deters-intervention.html

The eight funds created under the Public-Private Investment Program, or PPIP, reported net internal rates of return averaging 36 percent through Sept. 30, the Treasury Department said in a report this week. That compares with the 10 percent return for the Standard & Poor’s 500 Index and 8.2 percent for the BarCap U.S. Aggregate Total Return Index of bonds.  http://www.bloomberg.com/news/2010-10-22/ppip-funds-surge-36-on-average-in-first-year-treasury-says.html

the U.S. will continue to print dollars until China and other surplus nations with currencies pegged to the dollar cry uncle and revalue. As for Europe and those countries whose currencies float against the dollar, they’ll have to decide whether to join the Fed’s easing binge or accept rising currencies too. This is a recipe for more currency turmoil, not less. And it is likely to drive more capital, not less, to Asia and elsewhere other than the U.S. http://online.wsj.com/article/SB10001424052702303321904575571363698234720.html

If the U.S. economy were an animal, what animal would it be?

YORAM BAUMAN: I would have to go with a hamster right now. And it’s a hamster that’s been running around its cage, you know, for maybe seven years. And it’s tired. So, as a microeconomist, I look at it, and I think that the hamster needs some rest. Macroeconomists look at the hamster and think that the hamster needs some methamphetamines.

Some people are improperly conflating (1) the “put back” set of issues with (2) the foreclosure set of issues.  J.P. Morgan came up with a cost of $50 billion to $120 billion over five years for the former (put backs) and feels that the latter set of issues (foreclosure processes) will involve “minimal losses.”  JP Morgan is a barber in this situation telling you no one is going to take a huge haircut and for that reason is not to be trusted to be impartial given the conflict. Barclays estimated $75 billion re put backs, but at least admitted said it had “low conviction rates” around released estimates. Goldman has its own estimates, saying JP Morgan is “well positioned” re put back risks. Goldman said a worst-case industry scenario would be $84 billion.  Lots of mutual back scratching is going on by banks at risk.

Re put backs,

“…Wall Street is beginning to worry because it isn’t only private investors demanding repurchase of mortgage bonds. The New York Federal Reserve and Freddie Mac are also part of the group. Federal investigators have also launched a criminal probe. If the government is against the banks on this one, then the market is in serious trouble.

For mortgages, in particular, it would be very serious if Fannie, Freddie, and the Federal Housing Authority (FHA) band together against the banks. They are sold or stand behind somewhere in the ballpark of 90% of mortgages originated at this time. If they demand buybacks in chorus, or even require new procedures before buying or insuring additional mortgages or bonds, then the mortgage market will grind to a halt….”   http://www.theatlantic.com/business/archive/2010/10/will-washington-let-the-mortgage-put-back-fiasco-escalate/64868/

John Mauldin has a post today on put backs.  http://www.businessinsider.com/the-subprime-debacle-part-2-new-testimony-reveals-citigroup-knew-exactly-what-crap-it-was-selling-2010-10

Put backs and foreclosure issues can have huge second and third order effects, give the housing loan market is so critical to the economy. The risk to the greater economy is nontrivial. Just getting unemployment down is a monumental problem given available policy tools. For context,

A brand new analysis by Jan Hatzius, which performs a top down look at how much monetary stimulus is needed to fill the estimated 300 bps hole between the -7% Taylor Implied Funds Rate (of which, Hatzius believes, various other Federal interventions have already filled roughly 400 bps of differential) and the existing 0.2% FF rate. Using some back of the envelope math, the Goldman strategist concludes that every $1 trillion in new LSAP (large scale asset purchases) is the equivalent of a 75 bps rate cut (much less than comparable estimates by Dudley, 100-150bps, and Rudebusch, 130bps). In other words: the Fed will need to print $4 trillion in new money to close the Taylor gap. http://www.zerohedge.com/article/goldman-fed-needs-print-4-trillion-new-money

Hedging this set of risks is hard since people are arguably overpaying for the hedges. http://www.ft.com/cms/s/2b691ece-de00-11df-88cc-00144feabdc0,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F2b691ece-de00-11df-88cc-00144feabdc0.html&_i_referer=http%3A%2F%2Fftalphaville.ft.com%2Fblog%2F2010%2F10%2F24%2F380961%2Fftfm-on-av-23%2F   But maybe not.

QE2 explanation from two saltwater economists http://delong.typepad.com/sdj/2010/10/why-quantitative-easing-needs-to-involve-securities-other-than-government-securities.html

“Mr. Ritholtz puts it this way: ‘When the Fed opens its fire hose, you’re going to get wet. If you’re smart, you get ready for it.’”  http://www.nytimes.com/2010/10/24/your-money/24stra.html?_r=1&ref=business

Gross domestic product rose at a 2 percent annual pace, up from a 1.7 percent rate in the previous three months, according to the median estimate of 67 economists surveyed by Bloomberg http://www.bloomberg.com/news/2010-10-24/economy-in-u-s-probably-grew-at-faster-pace-on-consumer-spending-pickup.html