Que opinan los especuladores de los QE de Obama

Que opinan los grandes especuladores de los QE de Obama?

Fed Easing May Mean 20% Dollar Drop. By Bill GrossAuthor: William H Gross
Published by Reuters: Monday, 1 Nov 2010
http://www.cnbc.com/id/39957072

The dollar is in danger of losing 20 percent of its value over the next few years if the Federal Reserve continues unconventional monetary easing, Bill Gross, the manager of the world's largest mutual fund, said on Monday. "I think a 20 percent decline in the dollar is possible," Gross said, adding the pace of the currency's decline was also an important consideration for investors.

"When a central bank prints trillions of dollars of checks, which is not necessarily what (a second round of quantitative easing) will do in terms of the amount, but if it gets into that territory—that is a debasement of the dollar in terms of the supply of dollars on a global basis," Gross told Reuters in an interview at his PIMCO headquarters.

The Fed will probably begin a new round of monetary easing this week (“This will likely happen at the conclusion of the Fed's two-day meeting that ends on Wednesday.

But emotions are running high on both sides of the debate, and the amounts have varied from a high of $500 billion, on average, to lower amounts”
(http://www.cnbc.com/id/39947742/) by announcing a plan to buy at least $500 billion of long-term securities, what investors and traders refer to as QE II, according to a Reuters poll of primary dealers.

"QEII not only produces more dollars but it also lowers the yield that investors earn on them and makes foreigners, which is the key link to the currencies, it makes foreigners less willing to hold dollars in current form or at current prices," Gross added.

To a certain extent, that is what the Treasury Department and Fed "in combination" want, said Gross, who runs the $252 billion Total Return Fund and oversees more than $1.1 trillion as co-chief investment officer.

"The fundamental problem here is that our labor and developed economy labor relative to developing economy labor is so mismatched—China can do it so much more cheaply," he said.

Many Americans believe that the Chinese government is manipulating its currency and in effect stealing away American jobs and throwing the U.S. in an ever-deepening trade deficit.

But Gross said this is a byproduct of a globalized economy.

"It is a globalized economy of our own doing for the past 20-30 years. We encouraged all of this, but it is coming back to haunt us. To the extent that Chinese labor, Vietnamese labor, Brazilian labor, Mexican labor, wherever it is coming from that labor is outcompeting us and holding down our economy," he said.

Gross added: "One of the ways to get even, so to speak, or to get the balance, is to debase your currency faster than anybody else can. It's a shock because the dollar is the reserve currency. But to the extent that that is a necessary condition for rebalancing the global economy over time, then that is where we are headed."
"Other countries and citizens are willing to work for less and willing to work harder—and we forgot the magic formula somewhere along the way," Gross said.

In that regard, Americans should be investing a lot more overseas than they are to find growth as the U.S. remains in a slowish-growth environment, he said.

"Pension funds and Americans, in general, have a problem because their liabilities are dollar-denominated. It's probably worth the risk of getting out of dollars and getting into emerging countries and going where the growth is. All of which entails risk relative to the home country. But there's probably a bigger risk in simply staying comfortably within the confines of dollar-based investments."

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RELATED LINK
1. How a Weak Dollar is Good
2. Will QE2 Work?
3. The World's Biggest Debtor Nations
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1. How a Weak Dollar is Good

Cramer: How a Weak Dollar Is Good for US Companies.
Published: Friday, 29 Oct 2010.
By: Drew Sandholm.
http://www.cnbc.com/id/39913666.

"This is our time," said Cramer on news that the dollar was down against the yen on Friday.

Cramer said a weak dollar will help the US "crush" global competitors, including and especially Japan. As the yen continues to climb, he thinks Japanese companies will lose out to "cheaper" American businesses. On a higher yen, the "Mad Money" host recommends owning construction machinery company Caterpillar because it will be less expensive than its Japanese rivals. He said the same is true of pharmaceutical companies and the like.

US companies have recognized that the money is currently in emerging markets around the world and have done a great job at investing in those areas, Cramer said. Those investments have helped them to beat on earnings, despite low growth found in the US. With the dollar down against the yen, Cramer thinks US companies will win even more business in those profitable emerging markets.

2. Will QE2 Work?

Chadwick: QEII – Will it Work? I Have My Doubts.
Published: Monday, 1 Nov 2010.
By: Patricia Chadwick. http://www.cnbc.com/id/39952558

The new buzzwords – Quantitative Easing – have been added to the alphabet soup of remedies for our still ailing economy. The quick fix “QE” recipe consists of the Fed buying bonds and flooding the economy with the proceeds in the hope that more money will inspire the recipients to spend the dough and thus get the economy off its rump.

But will this round of quantitative easing achieve the desired result?

First, the problem with our economy at this time is one of demand – there is not enough final demand for goods and services. The consumer, the primary driver of demand, is a wary buyer these days and for good reason. Unemployment is high and seems to be stuck there. That does not inspire confidence in spending even if one has a job, particularly with all the headline news about Governments – Federal, state and local – needing to cut back spending, which means laying off employees or foregoing projects.


Secondly, consumers are still engaged in the process of trying to pay down their own already too high levels of debt.

While the numbers show some good progress on that score, both with regard to credit card debt and mortgage refinancing that is taking advantage of the lowest rates in half a century, consumers’ balance sheets are still far from secure.

So who will be the beneficiaries of this impending QE?

It seems to me that first and foremost it will benefit the big banks and financial institutions, including hedge funds, which have already benefitted handsomely for two years under the easy money policy of the Federal Reserve. For the lending institutions, the wider the spread between their borrowing costs and the interest rate they can charge on loans, the more profitable they are. Admittedly, many of the large banks still need desperately to continue to improve their own balance sheets, and if that were the only objective of the Fed, QEII would be a good idea.

As for the hedge funds, there is no dearth of nearly free money for them to leverage into gargantuan profits. But that provides little stimulus for the economy as a whole.

There is nothing inherently wrong with either banks or hedge funds benefitting from QEII, but that won’t bring the consumer into the business of spending, which must take place in order to goose this slack economy.

The stock market will likely respond favorably to QEII. In fact, one might argue it has already discounted some of the incremental money that will flood the system. One might argue, too, that is good for the consumer, and it certainly will help rebuild the devastated 401(k) plans of many working Americans. But unlike the era of the 1990s when consumers spent freely as they watched the assessed value of their house and the market value of their retirement accounts rise, this time I believe consumers will be careful not to return to their old spending ways. Instead they will take heart from any improvement in the value of their assets and will safeguard their nest egg.

Unfortunately for consumers, the easy money will have little if any positive impact on the usurious rates on their credit card debt. Despite the law passed earlier this year which provides some new protections, it does nothing to lower existing rates for past debt, rates that in many cases are well over 20%. That is a serious impediment to growth, because existing credit card debt is an economic millstone around consumers’ necks.

QEII will allow large corporations, which undeniably comprise the healthiest sector of our economy, to finance long term projects at very favorable rates. This is good news as it will add to productivity and corporate earnings. But it will do nothing to stimulate consumer demand or add to jobs.

The banks remain tightfisted in lending to small businesses. Until and unless the money spigot opens up to that all-important sector of the economy, the sector that in fact creates the large majority of new jobs, QE II will not spark growth.
Here’s a heretical notion: if the Fed really wants to stimulate consumer spending, why not simply put the money in the hands of consumers with the proviso that they pay down their own debt? That way the consumer would be in a position to buy ‘stuff’ again, to begin once more to consume. I am not really advocating that tactic, but among poor and poorer choices, this one would have a greater impact on demand than will the impending flood of new money.

3. The World's Biggest Debtor Nations

The World's Biggest Debtor Nations. By Paul Toscano, http://www.cnbc.com/id/30308959
Throughout the financial crisis, many national economies have looked to their government and foreign lenders for financial support, which translates to increased spending, borrowing and in most cases, growing national debt.

Deficit spending, government debt and private sector borrowing are the norm in most western countries, but due in part to the financial crisis, some nations and economies are in considerably worse debt positions than others.

External debt is a measure of a nation's foreign liabilities, capital plus interest that the government and institutions within a nation's borders must eventually pay. This number not only includes government debt, but also debt owed by corporations and individuals to entities outside their home country.

So, how does the US debt position compare to that of other countries? A useful measure of a country's debt position is by comparing gross external debt to GDP. By comparing a country's debt to what it produces, this ratio can be used to help determine the likelihood that a country will be able to repay its debt. // This report takes a look at the world's 75 largest economies to see which ones have the highest external debt to GDP ratio, calculated using the most recent numbers from the World Bank. We've listed the top twenty here.

Since the first time this report was published in April 2009, the debt situations of many countries have become of increasingly influential in the markets. In many European nations, these debt levels have caused international organizations and bond investors to put pressure on governments to cut public debt through austerity measures and additional reductions in spending. So, what are the world's biggest debtor nations? Click ahead to find out. By Paul Toscano Updated 30 Sept 2010

Countries Overloaded By Debt. Reed more in http:www.cnbc.com/id/30308959
Source: External Debt information from The World Bank, GDP information from the CIA World Factbook.