Obama: Quantitive Easing to End in October

[ClutchClark]

Does anyone recall a year back when QE2 was ending?

Emerging economies were quite concerned it would result in a downturn in construction and easy access to money.

Thailand's economy has taken a few hits in the past year already.

Any educated opinions on how the end of QE3 will impact Thailand and could you provide specifics?

Cheers

[farang000999]

Obama does not determine when QE will end. Lay off the Zero Hedge.

[ClutchClark]

Obama does not determine when QE will end. Lay off the Zero Hedge.

This is not a story or a thread about Obama. Try to focus. Perhaps I could type the important stuff in upper case for your benefit.

This is a thread asking about the impact to Thailand when QE ends this October.

Your post suggests you really have no contribution so feel free to run along.

[mania]

Obama does not determine when QE will end. Lay off the Zero Hedge.

Does the head of the FED work for Zero Hedge?

The move to end quantitative easing was announced by Fed chairman Janet Yellen in a press conference following a two-day meeting of the Fed’s policy committee

Title of thread may have been a little off but it is fact QE is ending in Oct

[Thakkar]

The gradual ending of QE was signaled so clearly and so far in advance that the impact has already happened with the weakening of Asian currencies against the Dollar. The latest revelation is that interest rates are likely to remain at zero till around the end of 2015. Again the signals are being given well in advance to avoid any shocks. Things should be steady as she goes.

T

[Gecko123]

Obama does not determine when QE will end. Lay off the Zero Hedge.

This is not a story or a thread about Obama. Try to focus. Perhaps I could type the important stuff in upper case for your benefit.

This is a thread asking about the impact to Thailand when QE ends this October.

Your post suggests you really have no contribution so feel free to run along.

ClutchClark:

Obama is the first word of your post. Perhaps you should have focused more when composing your post.

[Gecko123]

As quantiitative easing is reduced and interest rates in the U.S. begin to normalize, this should have at least in theory two impacts on the Thai economy.

(1) The dollar should strengthen. This is because demand for dollars should increase because more capital will be repatriated to the U.S in dollar denominated assets. For the past 6-7 years, the increase in the money supply and low US interest rates have caused a lot of money to seek favorable rates of return anywhere in the world where returns are more favorable than in the U.S. When US interest rates begin to normalize, some capital will return to the US because returns in the capital markets will be more competitive in comparision to rates of return available overseas.

(2) Global stock markets, including in the US, may drop, at least temporarily, but possibly long term as well. This is because US interests rates have been kept artificially low, and capital has had to find a home other than in the bond market. This money has to find a home. It has ended up in US stock, real estate, and junk bond markets because the Fed and most other central banks are holding interests rates below normal rates. It has also ended up outside of the US in foreign stock, real estate and bond markets because investors are "chasing yield" where ever in the world they can find it. As interest rates normalize, some money will be reallocated to the US bond market away from both US and international stock, real estate and bond markets.

If the Thai stock market were to drop, this would have a negative impact on the Thai economy because it would impact negatively the "wealth effect" (how wealthy people feel) as well as consumer confidence. When either of these go down, consumers tend to curtail spending, (again at least in theory), which would have a negative impact on the economy.

Edited September 19, 2014 by Gecko123

[swissie]

Having kept alive the western economies with their dismal growth rates with "free money" . (All the flogging of the death horse with free money has not brought it back to it's feet).

With regard to the already dead horse, what will happen if interest rates would be allowed to rise to "normal-levels"? = A vicious deflationary downward spiral would be set in motion, engulfing the entire globe.

The tattering western economies can only be kept alive by a drug called "free money".

Cheers.

[topt]

People are using the terms "normalise", "normal levels" but what is that likely to really mean? Perhaps 0-2.5% say is the new normal?

Also even if rates are "allowed" to rise this still appears to be more than 6 months away before it even starts as Thakkar mentions above.