What is going on out there is truly historic. The actions of the world's central banks, clearly acting in consort are certainly without precedent, the latest amazing act in this long-running drama is this morning's announcement by the governor of the Bank of Japan that his version of QE will not only continue but double in size with the aim of doubling the money supply by 2015. Kinda makes Ben look like a piker, doesn't it. Of course the Old Lady and the ECB chirped right in with no change in the discount rates with Draghi suggestion that he'll probably come down from .75% in the next go-around.
Frankly, at this stage I would think that to streamline things these guys would give up the foreplay of buying up bonds and just get naked and give the damn money straight to the politicians for them to spend on such beloved uses as 'Infrastructure" whatever the hell that is. Lots of jobs can be created with that and think of all the graft and corruption that could enhance..."hey, did you hear about the $700 mil that got lost in the Big Easy cleanup?" But here we are and it is unstoppable meaning that all the old rules don't work (or haven't up to this point) and we have to rearrange our thinking to accommodate this new reality.
Stock markets love it of course and the warnings still being issued are useless because no one is listening and have figured out that the central bankers simply are not going to stop; they love it as much as the stock boys. People are trying to convince themselves that things are really looking up but I keep asking myself why this market boom has been fueled by such sectors as consumer staples and not commodities? Why is energy fallen out of favor, and please don't tell me it is because the "green revolution" has lowered demand; the only thing the Chinese and Indians know that's green is the spring onion in General Gao's Chicken or Rogan Joss. There's a disconnect out there and I have no idea as to why. Reactions to improving economic conditions should be different, but they are not. Why?
And then there's Euroland. Mr. Draghi severely criticized the Cypriot bailout--or perhaps those responsible--but in so doing he highlighted the continuing and seemingly never-ending problem problem of a political union that cannot create a uniform set of rules for it's financial institutions and in my mind never will, which will have the long term consequences of starving the entire system of private capital as each nation continues to use its indigenous institutions as piggy banks which support an over-burdened and increasingly less sound public sector. Cypriot banks passing a stress test for two years on the trot loaded up with nothing but Greek assets? You surely jest, but just imagine a real country being forced to accept what Cyprus accepted because Angie wants to be reelected. Invest there? Again, you jest. Problem is with all that I have experienced over the years I'm not sure I'm right anymore what with have experienced in just the past few years. Oh hell, I'm too maudlin. Got to get back to having fun. Think I'll give Massimo a call tomorrow. That's always good for a laugh.
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