European, Chinese and US coordinated stimulus on iIn any event, the markets did not want the Twist program, they wanted additional liquidity injections in the form of QE III. In this respect, the market is like a heroin junkie. It needs ever-greater doses of money to continue moving higher. When it gets its fix, it will rally.
But a growing popular mistrust of stimulus is currently pressuring the Fed to forestall the launch of QE III. But a few more whiffs of financial turbulence could cause the Fed to fold. When the market rally ensues the Fed will claim victory. But the celebration will be hollow. The nominal gain in stock prices will likely be eclipsed by dollar declines and a more rapid gain in gold, oil, or other commodity prices. The result for investors will be higher nominal portfolio values but lower real purchasing power and a reduced standard of living.
But many of those who oppose QE3 do so because they believe the economy doesn't need more stimulus not because the stimulus itself is causing the economic weakness. As a result when the economy deteriorates, support for QE III could grow. In the end QE3 will likely be far more popular than another bank bailout (possibly to be called TARP II), which may be on the table if the Fed fails to rescue the banks it may be pushing over the edge with the Twist.
https://www.financialsense.com/contributors/peter-schiff/2011/09/23/twist-paves-the-way-for-qe-3
And also China is considering a round of stimulus:
A top IMF official suggested Saturday that China has the firepower to launch another growth stimulus if needed, following a huge package unveiled in late 2008 to counter the global financial crisis.
"China has the room to reintroduce a fiscal stimulus," said Anoop Singh, director of the IMF's Asia and Pacific department.
"It should probably be directed toward consumption and not toward investment."
https://www.eubusiness.com/news-eu/imf-economy-finance.cfg/
And then in the EuroZone as well:
Geithner called for European governments to work alongside the European Central Bank to show an "unequivocal commitment" to prevent the debt problems of Greece, Ireland and Portugal from causing a global meltdown.
The governments and ECB must work to "ensure nations with sound fiscal policies have affordable financing, and to ensure that European banks have recourse to adequate capital and funding to win the full confidence of their depositors and creditors," he said.
https://www.eubusiness.com/news-eu/imf-worldbank-us.cfm/
In fact what we now can anticipate is a coordinated ww financial stimulus of epic proportions..