Re: Sell-off and reversal / PIIGS / EU Partner Deal
Will QE even be enough to help? The Fed has been on the fence, essentially saying that keeping rates low for the foreseable future is good enough for now. But if Europe goes into recession, and with an ECB that can't print by mandate, I wonder if QE can help at all. If exports drop which we should certainly expect from an EU recession, and domestic sales flatten which we should expect from a US recession, then all QE will do is drive the P/E ratios higher - assuming QE drives the markets.
What we really need, what we have needed since 2009, is some way to ensure any future "bailout" or "quantitative easing" can reach the consumer. We are a consumption and service driven economy, so the only way to save the economy is to make sure consumer have money. This means lower interest rates for their homes, and lower credit card rates. Without that QE really takes a long time to "trickle down" if they trickle at all in a recession. I don't know how that can be done, maybe strong-arming the CC companies and banks into automatically resetting rates. Homeowners should be refinacning. As for credit card debt, maybe someone will see a money making scheme getting people to transfer CC debt into a 3-5-7 or 10 year term loans. Basically "greeking" the populace into refinancing debt at lower rates, so less money has to go to servicing debt and more can go into the economy in general.