Atlantic Capital Management, whose previous analysis on why the US Economy is caught in another perfect storm (link) was spot on, presents its latest special report focusing on the “desperate” Fed, and why it believes QE2 “Is a hail mary toward the wrong endzone.” The report, has three parts explaining why spending is about sources, not cost, the differential between wealth and the Chinese imbalance, and the last part emphasizes the Bernanke put, i.e., how there is no longer real risk in the decision-making process. For those who enjoy flipping to the last page of a book, here is the conclusion: “QE 2.0 moves us further in the wrong direction.
It removes even more market enforcement in favor of political hocus pocus, “nobody loses” nonsense. To return to sustainability and longterm growth, discipline must be enforced on everyone, including the Fed…As to the consequences of QE 2.0, we believe this new monetary amplifier will produce exactly the wrong responses for the reasons contained within this report. It’s as if Chairman Bernanke has lined up in the wrong direction, ready to heave one to the wrong endzone.
The only question is whether the rest of his teammates will tackle him before the damage is done, and the game lost.
Click on the below link to read the full report (pdf)
Atlantic Capital Management – A Desperate Fed 111610