[Sixstrings]

This week's CFTC Commitment of Traders reports validates what everyone knows: that the "short dollar" is now the biggest groupthink trade in the world. Or let us paraphrase - the "Ben Bernanke QE2 Is Imminent" trade is now the biggest groupthink trade in the world. One glimpse at the move in the COT data confirms what we speculated earlier when we discussed Goldman's virtual certainty that QE2 is coming in 31 days: that if there is no QE2 announcement, the shock that would reverberate from this as all the Kill (Dollar) Bill trades are unwound, may just blow up world markets and make the flash crash seems like a dress rehearsal for midgets (of the SEC intellectual variety).

(snip)

In summarizing the above data: to say that QE is priced in is an understatement. There are currently trillions of dollars on the line that the Fed will launch QE on November 3. The impact of that announcement will be one of a flash of asset price euphoria followed by the realization that monetary intervention will be just as failed that time as it was before, and that even as rates drop to zero, it will do nothing to reduce the excess slack in the economy.

As for housing, zero rates will merely keep prices artificially high, and coupled with the recent M3 scandal, it will make transactions even rarer, as few if any will be willing to buy at inflated prices when their economic outlook is not only uncertain but deteriorating. More importantly once the Fed has engorged its balance sheet with $3-5 trillion in assets, all naive hopes that a normal unwind of these economic supports can proceed in a normal manner without triggering full dollar collapse, will be extinguished.
http://www.zerohedge.com/article/weekly-cftc-report-kill-dollar-bill

Sounds like the global economy is screwed either way. The world is counting on a crashing US dollar and has short positions.. so if the Fed doesn't announce the expected massive QE2, then the countries all in with shorts are screwed. And if the massive QE2 happens as expected, the shorts win but the dollar is screwed. Sheesh, this gets confusing.

[Plantagenet]

The world is counting on a crashing US dollar and has short positions..

Obama's economic policies have clearly failed and Obama promises more of the same.

Of course the world expects the US economy to continue in the doldrums and the US dollar to lose value.

[Revi]

Plant, who do you think Obama is? He's just the latest captain of the Titanic. At least he has the courtesy to go down with the ship. I think we hit the iceberg back in 08 with captain Bush at the helm. Then they loaded all the lifeboats with tarp funds and all the rich people pushed away from the hull. The poor are locked under the decks and us middle class passengers are listening to the band play on. Obama made us all comfortable with some of the stimulating food and drink left over from first class.

Now there's not much left to do but wait until the decks start to tilt.

Sounds like that's coming soon.

Gold and silver are up over 10%, and now oil is up also. The show is about to begin. I sure wish I was in a lifeboat instead of these lounge chairs on the deck!

[Plantagenet]

Plant, who do you think Obama is? He's just the latest captain of the Titanic.... The poor are locked under the decks and us middle class passengers are listening to the band play on. Obama made us all comfortable with some of the stimulating food and drink left over from first class.

Thats a great metaphor Revi, but I can't imagine what is it about the record unemployment, record poverty, record foreclosures, and record deficits we are experiencing on Obama's watch that makes you feel "comfortable."

[Keith_McClary]

QE2 launches QE2

[IslandCrow]

The QE2 was a beautiful ship. I saw it as it sailed from a harbour in Norway on its last world cruise.

Something in me wanted the second round of qualative easing to be delayed and all the "Shorts" hammered. We are in huge mess as it is, and to screw people who are down just to make tons of $ is 'not nice'.

[Quinny]

What's the significance of November 3rd?

[Sixstrings]

What's the significance of November 3rd?

It's the date of the next Fed meeting.

[IslandCrow]

What's the significance of November 3rd?

Its two days before the British celebrate (with bonfires and fireworks) an attempt to blow up Parliment.

[IslandCrow]

On a more serious note, as the OP refers to 'flash crash' the report of the May share crash is now out:

May's 700 point sudden share crash in the US was caused by a single trader's computer program, according to the US trading watchdog the Securities and Exchange Commission (SEC).

The so-called "flash crash" on 6 May saw the Dow Jones index fall 10% in just minutes.
...
It said a "large fundamental trader" used an algorithm to sell 75,000 stocks worth $4.1bn (£2.6bn) extremely rapidly.
...
The report said the trader initiated the program to sell shares to offset the risks of an existing share holding.
Under pressure

The program had previously executed a similar sale over more than five hours, but on May 6, when the markets were already under pressure due to worrying news about the European economy, the sale was carried out in just 20 minutes.

This then caused other, super-fast trading algorithms to go into a spiral of selling that led the Dow Jones index to drop by nearly 10%.

Although it recovered within minutes, authorities have since introduced "circuit breakers", which can halt trade on certain stocks for 10 minutes if they fall by more than 5%.
...
Theories about the possible cause ranged from a rogue trader to terrorism.

http://www.bbc.co.uk/news/business-11456941

I fid it interesting that they blame attached to just one trader, and not to all the other 'super-fast trading algorithms'. To me this smells of trying to make one person the scapegoat to cover the sins of the nation's financial institution's "computer models".

[Expatriot]

Plant, who do you think Obama is? He's just the latest captain of the Titanic. At least he has the courtesy to go down with the ship. I think we hit the iceberg back in 08 with captain Bush at the helm.

The course was set long ago.

It's a myth that any captain could have altered the course.

The Captains did no steering.

[Revi]

I just read that the truth came out after nearly 100 years on the Titanic. They steered into the iceberg by mistake. The Captain was ordered by a representative of the shipping line to keep steaming ahead, even though that sank the ship quicker. They didn't want to panic the passengers.

Does this sound familiar? Any parallels with the present economic situation?

Maybe Captain Obama steams ahead because Bernanke, the representative of the shipping line demands it.

[Livewire713]

According to Plant everything was just fine until Obama was elected. He blames everything on Obama. If he had it his way we would go back to the good old days of 2008 so we could relive the whole crash again. If we did maybe he would remember the mess the current administration inherited. If I had my choice I would go back to 98 at the start of the dot com and Y2K bubble when gold was under $300 a ounce. Im not some Obama worshiper but everytime Im reading a new topic theres a Plant post about Obama with some cartoon. We all know you hate Obama and you've probably posted that fact thousands of times.

[Plantagenet]

..everything was just fine until Obama was elected.....

Your suggestion that "everything was fine until Obama was elected" is silly.

Things weren't fine before Obama was elected...and they certainly aren't fine now. In case you haven't noticed, Obama's economic policies have failed to grow the economy or create jobs, but they have been a smashing success at exploding the US budget deficit. Now we are going to have more QE, which will destroy the value of the dollar.

But don't you worry about Peak Oil or the collapsing US economy or a double dip recession or Obama's lies about "recovery summer" or QEII or the absence of an energy policy in the US or anything else that is actually happening right now....Obama says everything is going great so just party ON, dude!

[eastbay]

..everything was just fine until Obama was elected.....

Your suggestion that "everything was fine until Obama was elected" is silly.

Things weren't fine before Obama was elected...and they certainly aren't fine now. In case you haven't noticed, Obama's economic policies have failed to grow the economy or create jobs, but they have been a smashing success at exploding the US budget deficit. Now we are going to have more QE, which will destroy the value of the dollar.

But don't you worry about Peak Oil or the collapsing US economy or a double dip recession or Obama's lies about "recovery summer" or QEII or the absence of an energy policy in the US or anything else that is actually happening right now....Obama says everything is going great so just party ON, dude!

Obama's stupid wars aren't contributing anything to improve things either. That is some serious money the USA could instead spend at home making the USA a better, safer, more economically sound nation. The money wasted on Obama's Wars represents hundreds of billions squandered on killing, in a perfect, just perfect, example of the liberal love and craving for mass murder.

[Cloud9]

When you think about our war presidents and casualties it is rather interesting.

Republican Lincoln 646,392
Democrat Wilson 320,518
Democrat Roosevelt 1,076,245
Democrat Truman 128,650
Democrat Johnson 211,454
Republican Bush-1 1,231
Repub/Dem Bush -2 Obama 100,000

[Revi]

So we're all waiting for QE2. Will it really happen or is it a head fake to get people to buy stocks and schlock?

We'll see...

[Keith_McClary]

Stiglitz: The FED's Flood Of Liquidity Is Throwing The World Into Currency Chaos (Ambrose Says $30 Trillion QE2)

On the effectiveness of quantitative easing:

“There is lots of instability caused in part by the flood of liquidity from the Fed and the ECB. The irony is that the Fed is creating all this liquidity with the hope that it will revive the U.S. economy. It is doing nothing for the U.S. economy and causing chaos for the rest of the world.”

“In the U.S., and in some other countries, will the policy of quantitative easing suffice to solve the problems of inadequate global aggregate demand? The answer clearly is not. Lowering the interest rates may help a little bit, but it’s much too weak to address the problems facing the U.S. and Europe. So the answer is, and that is the point Soros made as well, we need fiscal stimulus.”

hint of scandal

On August 19, just nine days after the U.S. central bank surprised financial markets by deciding to buy more bonds to support a flagging economy, former Fed governor Larry Meyer sent a note to clients of his consulting firm with a breakdown of the policy-setting meeting.

The minutes from that same gathering of the powerful Federal Open Market Committee, or FOMC, are made available to the public -- but only after a three-week lag. So Meyer's clients were provided with a glimpse into what the Fed was thinking well ahead of other investors.

[gollum]

Gold, silver, and oil are all way up the past week or so. Maybe it's nothing but I smell a rat in the room.

[pedalling_faster]

What's the significance of November 3rd?

Its two days before the British celebrate (with bonfires and fireworks) an attempt to blow up Parliment.

i thought Guy Fawkes day (about which V for Vendetta was made) was on November 15.