has the co-o mill been commissioned?, page-6

AverageJoe,

US equity markets are already on over-high earnings multiples, held up by unrealistically low interest rates.

US$Trillions of derivative bets are balanced on a continuation of low interest rates supplied by 'easy money Bernanke' and TBTF banks have minimal equity (c. 3%) in their own businesses - again using maximum debt leverage because of their ever friendly Fed.

Then you have the over-leveraged US households and $17T of Federal debt (and growing) with no serious political will to reduce deficits.

So, in this current debt scenario, how on earth is the Fed going to remove the QE that is keeping bond yields low?

The Fed 'is' the bond market. They may talk a lot about tapering, but it is their actions that will tell the true story.

If they stop printing the $85B/month who else will buy Federal and mortgage debt?

Rate rises will be catastrophic for Wall street and Main street.

Difficult for me to see how all this can end without huge (negative) consequences for the financial sector.
CPDLC