U.S. Quantitative Easing, The Sharks Are Circling, and Gold Backed Eurobonds?

By: Ian Campbell | Mon, Jun 4, 2012
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Why Read: More to focus on possible further U.S. (and other Central Bank) quantitative easing, than on the possibility of gold backed Eurobonds - but to be aware of at least some 'talk' with respect to the latter.

Featured Article: For reference to possibility of gold backed Eurobonds, see King World interview with Don Coxe of Chicago based Coxe Advisors.

Commentary: As you likely are well aware, U.S. Federal Reserve Chairman Ben Bernanke, and the Federal Reserve Governors generally, have for many months advocated and adopted a policy of low interest rates and have resisted further U.S. quantitative easing measures.

As you also know if you read these Newsletters regularly, I have been of the consistent view for some months that President Obama will be re-elected on November 6 - baring unforeseen evident U.S. increased economic turmoil.

Both these things have clearly come to the fore with what is ongoing in the Eurozone economies (particularly, at the moment, Spain's - where the relevant phrase is 'at the moment'), last Friday's U.S. Jobs Report announcement, and Mr. Romney's immediate political protestations over what that Jobs Report means to Mr. Obama's leadership:

seem likely to bring the U.S. Federal Reserve back to the 'quantitative easing table'. The Federal Reserve likely will get there on their own, but will also likely be the recipient of 'moral suasion' or whatever Obama Administration 'nudges and pushes' can be brought to bear to get them there. This will become ever more the case if the U.S. equity markets continue to fall over the next few days and weeks. This is because, aside from the Obama Administration's interest in President Obama being re-elected, the Federal Reserve will not want to raise interest rates in what has to be seen as, at best, a very fragile ongoing U.S. technical (economist-speak) economic recovery;

  • in the third instance, what could be done to create U.S. jobs quickly? Announcement of large infrastructure projects would be one avenue. Is that likely to happen? Unlikely, unless the Obama Administration could unilaterally announce such things - which is almost certainly not going to happen if for no reason other than the U.S. is already bumping against its debt ceiling. Other 'quick job fixes' are neither obvious or likely.

  • So what does all this leave - more, and perhaps substantially more, Federal Reserve announced quantitative easing. Watch for it in the 'theatre nearest you' - your computer screen or your television screen.

    With respect to the Obama Administration, there is blood in the water and the sharks are circling. President Obama grew up in Hawaii, and he looks to be in quite good physical shape. Democrats everywhere have to be hoping he is a very fast and proficient swimmer.

    Consider the high probability that the U.S. and the rest of us (given the current ongoing importance of the U.S. and its economy to what transpires in the rest of the developed and developing world) are in for a 'very long and very hot summer'.

    Don Coxe - Emergency Fed Meeting & Gold Backed Bonds
    Source: King World News, Don Coxe, June 2, 2012
    Reading time: 3 minutes

    Also read: Jobs report upends 2012 race
    Source: The Hill, Amie Parnes, June 1, 2012
    Reading time: 2 minutes



    Ian Campbell

    Author: Ian Campbell

    Ian R. Campbell, FCA, FCBV
    Economic Straight Talk

    Through the Economic Straight Talk Newsletter Ian R. Campbell shares his perspective on the world economy, the financial markets, and natural resources. A recognized business valuation authority, he founded Toronto based Campbell Valuation Partners (1976), Stock Research Portal (2007) a source of resource companies market data and analytic tools, and Economic Straight Talk (2012). The CICBV* annually funds business valuation research in his name**. Contact him at icampbell@srddi.com.
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