Get ready for QE3

Stocks plunged again today until a late rally thanks to a rumor that’s been making the rounds for a few weeks and seems to be gathering steam.

U.S. stocks climbed, erasing earlier losses and preventing the longest Dow Jones Industrial Average slump since 1978, as investors speculated the Federal Reserve will start another stimulus program.

As usual, Obama and his core of geniuses aren’t willing to let the market work through its normal cycles.

Speculation that the Fed will embark on a third round of asset purchases to stem off a recession grew after the Wall Street Journal said three former central bank officials support the approach.

“Every time we see economic weakness, there will be discussion about more economic stimulus,” Richard Sichel, who oversees $1.6 billion as chief investment officer at Philadelphia Trust Co., said in telephone interview. “That could be the case given the fairly weak economic figures we’ve had….”

So we’re going to get even more money pumped into whatever group of major potential donors to Obama might need it before they think about how to invest campaign cash next year. Like QE1 and QE2, no doubt QE3 will also be a sinking ship as far as our long-term financial health is concerned.