They'll be printing again before the end of Q1 2010, I should think. Everything above 417K in mortgage land has 1) no government support, 2) needs high incomes.
If one thinks there will be zero job growth (which actually would be good news at this point--we are still some ways away from even zero job growth) then I don't see how significant MBS support won't be needed still.
Also, federal tax receipts in 2010 are going to be a horror show.
What I like is that the FED is always wrong. They clearly thought that they could end the program in a timeline, b/c by then robust dynamic effects would be well in play. Now, obviously, they are extending not in size but in time, b/c they realize things are not strong enough to do a sudden stop of monetization.
How long do I expect Washington, Treasury, and FED to extend and pretend like this?
Years. :-) It's another reason why I call this a depression. The govt support from all quarters will go on for years: extensions of unemployment benefits, stimulus programs, MBS and UST monetization, 0 money down FHA, Treasury auctions to fund FDIC, and on and on and on. You know the reason: Joe consumer can't consume anymore. And by the time he can again? He'll be so sick with fear that he'll hoard any new earnings.
Today was a good reversal in markets, and assets. It was much needed. Anti-Dollar stuff had a bit of a blow off. It would be better for USD bulls and top tickers if we had blasted away into the close, then given it all back tomorrow. Now we're set up for another commodity Friday, when everything anti-dollar closes strong.
Whatever, though. Gold is totally unfazed and still sits above 1K. What I like about gold here is that the buggies are very nervous and the advisors are selling their gold equities.
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