NEW YORK ( TheStreet) -- After more than a month of expectation, QE2 time has finally arrived. Both debt and equity markets have been excited in anticipation despite the fact that no one really knows, including, it seems, the Fed itself, what the Fed intends to accomplish by bloating up its already pregnant balance sheet. There are likely to be serious unintended consequences.
First, many companies have invested in plant and equipment overseas, so their commitment isn't reversible in the short-term. Second, most companies look for a business environment where they are comfortable, i.e., where there is visibility into the future tax and regulatory environment, something that the U.S. currently lacks. Third, and what isn't widely recognized, is that a weak dollar policy (QE2) drives dollars (capital) to other countries in the attempt to protect its purchasing power. As dollars flow to places with more stable tax and regulatory environments and where there is stronger growth, it is invested there, thus enhancing economic growth there, not in the U.S.
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