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Comment by chrisco255 | Hacker News Reader

QE never really worked, bailed out a bunch of corrupt and broken companies that should have gone bankrupt, and kicked the can down the road. They were supposed to unwind QE1 but they never did. And $4T in toxic QE1 assets sat on the Fed's balance sheet going into this mess. The Fed is propping up the bond market and toying with the idea of buying equities. We just had 17 million people file for unemployment in 3 weeks and the Dow went up a few hundred points. Our markets have been completely decoupled from economic reality because the Fed is faking demand and not letting the markets crash like they should. Our fiscal deficit is already $3 trillion this year and it's only April. This is a recipe for disaster. How much of corporate America will the Fed own when this all comes crashing down? Will we have a nationalized economy by default?

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The markets dropped because other countries already had similar issues.

The stock has it mostly priced in, but the rise of the stock is attributed to the fact that European countries are flattening, vaccines and ramped up testing in the US.

To paraphrase Luke Skywalker in The Last Jedi, everything in that sentence is wrong--or at least seriously questionable.

> The stock has it mostly priced in

It does? I've seen about the same number of analyses indicating that companies are doing dubious things to bolster their earnings on paper (and haven't priced in the full cost of the crisis) as I've seen supporting your argument.

> but the rise of the stock is attributed to the fact

Explanations for this abound. From basically every corner, qualified, popular, neither, and both. Post-Black-Swan shockwaves are usually accompanied by a lot of confusion and after-the-fact pseudorationalization, and this situation is no different.

> European countries are flattening

Sort of (recorded clusters/outbreaks keep getting reported), partially (some countries are doing really well, some are not), and only according to really, really new data.

> vaccines

Presumably you mean vaccine research getting underway? This is happening, to be sure. Still has the attribution (after-the-fact potential for false correlation) problem mentioned above.

> ramped up testing in the US

There's not consensus on the effect of more testing on the markets either. Testing builds confidence/information on the one hand but, in many US states, it has revealed worse-than-expected (well, really worse-than-hoped) numbers of sick people on the other.

I guess the upshot of the above is: you make a very authoritative statement about why the markets have behaved in a certain way. That information isn't even beginning to be known, or, at this early phase, knowable, with any sort of confidence.

Edits: grammar.

Europe is flattening, yes. It's also ramping up tests.

We know it is worse than thought in the US. The Outlook the markets check are 18 months.

You are still checking the next quarter, while I think it's a general consensus that eg. The summer will be lost.

It will improve in 2021 for sure.

+ That quarantine gets lifted probably with contact-tracing apps as it is in South Korea.

QE1 worked well and the banks are not corrupt. It's in the later years, while stocks and the economy were on a tear, that the Fed at. al. refused to raise interest rates ... this perpetuated the housing bubble among other things, which is the #1 source of inequality (hint, it's not between the billionaires and the rest of us, it's between the propertied and the unpropertied).

QE1 did not work at all. And the Fed's 0 percent interest rates have distorted capital markets causing corporate debt to skyrocket. That alone is propping up zombie companies and this overleverage is what will make the coming recession / depression even worse than 2008. Note: the Fed is violating the Federal Reserve Act by using BlackRock as a proxy for bond purchases. So please do not tell me they are not corrupt. They're beyond corrupt.

This. The 'race to the bottom', committed globally by central banks, to get to 0% interest rates, and keep them there for the sake of keeping the markets 'up', exacerbated by top level politicians' desires/directives. If there's no cost to borrow, why not keep borrowing? And keep borrowing? And lending? Until things really unwind in a recession/depression that will de-lever everything/everyone. The moral hazard? I try to maintain my own family finances, keep a budget, save for expensive things. And in the span of 3 weeks the US has spent $7,000 of every individual's future ($2T / 340M people).

> And in the span of 3 weeks the US has spent $7,000 of every individual's future ($2T / 340M people).

You can’t really claim that. The reality in the progressively taxed US is the higher tax brackets pay the overwhelming majority of the total tax bill.

In reality, the payback of that $2T will fall on the top taxpayers. So it’s more like $10 for most Americans and $100000+ for the top percentiles. Bezos types will pay tens of millions.

Do you really believe that Bezos and the top 1% will pay the bill? The rich have an army of accountants to find a way to not pay.

No, it is always the middle class (Upper- and middle-) that ends up paying the bill. Mostly through decreased standard of living.

of course banks are not corrupt, Wells Fargo especially

This comment is false and/or sarcastic.

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