All you want to know about QE2 explained clearly and very, very fast
Are we talking about the ship QE2?
No.
Are we, metaphorically speaking, talking about the Titanic?
According to Naked Capitalism‘s Yves Smith, yes, we are in terms of its prospects for the U.S. economy.
Smith is referring to the Federal Reserve (known as the Fed) and its just launched $600 billion quantitative easing program QE2. Yesterday Smith sat for an in-depth interview with Paul Jay at The Real News (videos below).
Smith is a graduate of Harvard Business School and runs a financial management consulting firm in New York. Her website is one of the most read in the world, according to Wikipedia.
(On a post on her website today Smith apologized for speaking so fast in this interview, saying she was rushed for time – but there’s a transcript below the videos for anyone who gets a bit lost).
Interview intro:
Paul Jay: So let’s see if I have this right. The Fed’s going to take $600 billion and buy government bonds that are owned by the big banks. Except they’re not going to just buy them from the banks, they’re going to let other people buy them from the banks and then sell them to the Fed and make money on that.
I mean the whole thing seems rather bizarre. The critics are saying that this move, as many other moves of the Fed, seems to have absolute benefit for the big banks and relative to dubious benefit to the economy. So what’s your take?
Yves Smith: I would agree with that…
Smith goes on to explain just why the Fed’s QE2 is not a great idea. Along the way, she provides an expert view of the Wall Street (and elsewhere) financial world before, during and after the 2008 crisis. She also talks about the Tea Party movement in the U.S. and why its followers are so angry. A succinct analysis of what President Obama has done to make matters worse is also included.
Highly recommended viewing. In the past couple of weeks I’ve been doing a bit of reading about QE2, and I think this interview with Smith offers as clear and complete an understanding of the confusing and complicated FED and its various QEs as you may be able to find. (Tip: on the Real News webpage, the bottom video is segment one, and the top video is segment two of the interview).
Warning, you may need a good stiff drink afterwards.
Interview, segment one:
Interview, segment two:
