Claudio Guler

Stephen Roach, a senior executive with Morgan Stanley Asia and Yale University lecturer, discusses magic quantitative easing, betting the ranch, policy traps, short-termism, and accountability in a must-see interview from Davos with Tom Keene, host of Bloomberg’s Surveillance Midday.

Roach: “Central bankers right now are trying to pull the wool over our eyes with zero interest rates and this magic called quantitative easing (QE). QE works for economies in crisis. What does it do to sustain economic recovery?”

Kyle Bass from Hayman Capital, the investor who foresaw and capitalized on the 2008 crash, succinctly explains how the US Government intends to resolve its economic conundrum.

Update, Jan. 25: ZIRP now through late 2014.

Gideon Rachman confessed on Tuesday’s comment page of the Financial Times that “he’s feeling strangely Austrian.” Sebastian Mallaby, referencing Rachman’s article, confessed a similar sensation when contemplating banks on today’s comment page of the Financial Times. I too must confess that over the past year I have come to find substantial appeal in the explanatory power and reform potential of the Austrian School of economics. Too bad inside the beltway policymakers are busy doing the ostrich.

In the mean time, our treadmill economy awaits its next shot of juice over the coming months, the real deal quantitative easing 3 (QE3): a resumption of large scale asset purchases. Primary Dealer forecasts here. QE3-lite – zero percent interest rates through 2013 and “Operation Twist” – was only a bridging mechanism.

Here’s to sticking it to savers and long-term bond holders via dollar debasement, to perennially bailing out the crony capitalists, and to maintaining the domestic socio-economic hierarchy as the US undergoes relative economic decline.

My neighbors in Westchester thank you Mr. Bernanke.