Euro Zone Will Join Fed In QE

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November 04, 2010 12:48 PM

My Dear Friends,

Mark my words, the euro zone will join the US Fed in quantitative easing before this chapter of the darkest days of finance in human history draws to a close.

The US Fed actually snagged the euro zone in what the Chairman sees as necessary. The FOMC vote was almost unanimous for QE. That alone carries a significant message.

The austerity measures in the euro zone are, without any doubt, going to come back and bite them hard in the rear. Did you notice the condemnation of QE quieted today with only China standing tall?

QE is wrong, but there is no other alternative to the powers that be. It is the lesser of immediate economic evils as compared to the austerity of balance sheets thanks to the FASB.

It is the lesser of immediate economic evils as the cause of the entire problem, OTC derivatives, not only have not been addressed, but the damn things have actually gotten larger. This exact technical formation you see today took place just before the geometric rise to $887.50 in gold�s price from mid 1979 to1980.

The gold market has the power here to run to $1444 and even $1650.


European Central Bank Keeps Rates at Record Lows
Published: November 4, 2010

LONDON � The Bank of England and the European Central Bank left their key interest rates at record lows Thursday after recent data showed that the economic recovery was showing some resilience.

A day after the U.S. Federal Reserve moved to pump another $600 billion into the banking system to strengthen the U.S. economy, the Bank of England decided against any new stimulus measures for Britain, leaving its bond purchasing program at �200 billion, or $322 billion. The main interest rate remains at 0.5 percent.

At its meeting, the European Central Bank left its benchmark interest rate at 1 percent. Investor attention was focused instead on anything that E.C.B. President Jean-Claude Trichet might say later in the day about the bank�s plans to tighten monetary policy � even as the Fed moves in the other direction.

The Bank of England had considered expanding purchases of government debt, so-called quantitative easing, last month, but positive economic data released since then alleviated pressure for it to act.

The services sector, including banks and airlines, and manufacturing reported an unexpected growth in October and growth of Britain�s gross domestic product beat economists� forecasts in the third quarter.

The Bank of England would find it �hard to justify further purchases without some evidence,� Jens Larsen, chief European economist at RBC Capital Markets in London and a former Bank of England official, said. �The rebound has been pretty robust and inflation has surprised us on the upside. At the same time there are clearly some big risks facing the economy. Quantitative easing is not off the table.�