There are some severe dangers in the Fed's new course of action, says Uwe Parpart, chief economist & strategist, Asia at Cantor Fitzgerald. He tells CNBC it could undermine the value of the dollar and create a bond market bubble.
Fed's Move is Beneficial for Financials
The Fed's move to buy asset-backed securities will bode well for the financial sector, say Donald Straszheim, managing principal at Straszheim Global Advisor and Bill Smith, president & senior portfolio manager at SAM Advisors.
Fed Creating Inflation Problem
“What they are doing is highly inflationary … for the short term it is appropriate, but for the long term they’ve got anther issue that they’ll have to deal with another day,” Jim Bianco, president at Bianco Research, told CNBC.
“How do they get out from under zero interest rates and all of this inflationary policy without it producing inflation on the back end?” he added.
Liquidity & Risk Appetite Seen Returning in '09
Following the Fed's unprecedented actions, Sean Fenton, portfolio manager at Tribeca believes that liquidity and risk appetite will start to return to the market next year.
All that Liquidity Does Not Lead to Inflation
All the liquidity that the Fed has pumped into the system is unlikely to lead into an inflationary spiral, says Ilian Mihov, professor of economics at INSEAD.
US Economy Could Shrink Up to 4% in Q4
The U.S. economy probably contracted as much as 4% in the current quarter, says Arjuna Mahendran, MD & head of investment strategy, Asia at HSBC Private Bank. And it could contract at a similar pace in the first-quarter of 2009, he predicts.
Fed Has Enough Ammunition