The day of reckoning is coming. The world will only let the U.S. do this for so long. Already countries are making deals with other countries to accept their national currencies and not the U.S. dollar in trade. This will be like a virus and spread all over the world.
The fed may be able to purchase as many T-bills as it wants with the tap of a keyboard but there is no way it can step up and prop up the dollar when foreigners start to repatriate the currency. The flood of returning money will be unmanageable!

I was wondering how Ron Paul managed to get the fed audit legislation passed…I think the powers that be let it get passed so that the fed would get audited and become the scapegoat for the current U.S. financial mess.
After the audit and shocked revelations, U.S. will default on their debt saying that it was the fed’s fault (not a U.S. government entity). The U.S. government will plead ignorance. Then the world will be informed that the fed’s U.S. dollar (fed-dollar) is not worth the paper it is printed on and a new currency will be born. Before that day, interest rates will sky-rocket as the U.S. tries to attract any foreign buyers it can to the U.S. dollar.

The U.S. Ponzi scheme will be over.

PS: Remember Bernanke’s warning that if audited the U.S would collapse.

R.

A 50% retracement for stock indices was a good probability once the Fed’s intention to flood Wall Street with money was clearly evident. Now, the loose money environment creates a coin flip chance or less for this retracement to stretch toward 75% (around Dow 11,700 if one uses DJIA 13,500 in December 2007 as the market “norm” before the big sell-off). While a 75% retracement would take stock indices to the level of consolidation preceding the October 2008 plunge, such a retracement would increase the likelihood of a very difficult to contain sell-off when inflation appears and interest rates rise. Those who want to get their money out of the Wall Street system before rules constrain capital egress should not wait too long.

Whitney had her day in the sun she needs to do some new research and not just rehash the same old story of 13 months ago.

I am still expecting a USD rally – YES A RALLY.

Daily charts of key stock indices are still giving bearish warnings.

Is the bear market rally ending ?

I post my analysis at this forum:
http://www.zerohedge.com/forum/market-outlook-0

IMO, either you are in the double-dip camp or you believe in the recovery (however gradual). The economy (and especially the market) won’t undergo a period of no change. In fact Rosie has loudly and frequently said the market has priced in a strong recovery. If we don’t get it the market will go down and the economy will follow (reflexivity, Soros). I doubt the banks will every “come clean.” The political class won’t allow it, as it would expose how stupid and complicit they are. That means banks will gradually be bailed out at a 20% per year clip for 5 years. This year, contrary to the “nothing has changed” argument, I would guess the banking sector has sold to the Fed 20% of its toxic assets. This likely won’t increase in velocity any time soon because the taxpayers are finally realizing they’ve been had, but the banks will be bailed out. As Buffett says, “they’ll earn their way out.” What interests me more than anything, and I think people lose track of it because of the “liquidity” and “inflation is coming, just watch gold” arguments, is what the real demand story is for industrial commodities: oil (inventory very high), natural gas (this market is dead, utterly, with too much production–I was in the oil business and they simply produce until they fail), steel (no demand, see Nucor’s CEO), aluminum (see Norsk Hydro’s CEO comments about the insane inventory levels of aluminum), and the list goes on and on. We have too much of everything. Using debt we expanded capacity in everything, including loans. Even with C4C we can’t get annualized car demand above 70% of its peak. Without C4C it will likely drop to 50%. I am in the camp that says in 10 years we will be nearly where we were in 2007. The only remedy is a major crash that flushes out all the capacity. It will need to start in Asia (China). If that occurs expect lots of civil unrest, lots of mini wars, and ultimately a lot better world in 2020.