Late Friday speaking to the SF Chronicle, SF Fed Pres Williams, a voting member, called for more QE saying QE3 is “a very big step…The hurdle to taking this step is relatively high. In my view, we have reached this hurdle.” Similar to Rosengren who wants also more QE3, Williams, a Ph.D economist, has spent his entire working career at the Fed. In Asia, the Shanghai index fell 1.5% after there was no hoped for reserve requirement cut after the weak economic data last week. Japan’s economy in Q2 grew 1.4% annualized but that was below expectations of up 2.3%. Nominal GDP actually fell q/o/q. In Europe, Greece’s economy contracted for the 14th quarter in the past 15 y/o/y and is now down about 20% from its peak in Q3 ’07. As a comparison, the US economy fell about 26% in the Great Depression. Spanish and Italian 2 yr bonds are lower for a 5th day
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