This is how tenuous the markets really are. The slightest breeze from the Federal Reserve, the mere hint that the flow of money will slow, sends one of the world’s major stock markets pinwheeling.
At this moment US market futures aren’t looking very good.
Since the dollar continues to be the world reserve currency, and since the mega banks float like clouds over the entire planet paying little attention to borders, we shouldn’t be surprised. But that the Fed has essentially given away $1 trillion to non-American banks is pretty amazing . (Not that American banks are any better than the foreign ones of course.)
Juiced data coming out of the Ultimate Crony Capitalist State? We are shocked.
Either we continually prime the pump, keep interest rates at extraordinarily low levels and do all sorts of other central bank magic, or we fall into depression? This is basically what the Minneapolis Federal Reserve president said recently.
We spend billions and billions subsidizing the security apparatuses of our allies. Given the current financial situation in this country does this make sense?
What else is the Fed going to do? It will likely keep easing until it can’t ease any more. (For whatever reason.) It has no way out.
Just one more hit. That will make everything better. Just…one…more…hit……….
Not only is the Bank of Japan going to buy huge amounts of government bonds, but it’s also going to buy stocks, ETFs, and real estate investment trusts.
Printing money and broad fiscal stimulus isn’t going to work because of deep structural issues within the Japanese economy. Specifically the country’s population keeps getting older while the economy is also becoming more and more integrated with China’s. Deflationary winds are gale force and steady.
The major economic players of the world are in the midst of devaluing their currencies, or attempting to. The goal is to increase competitiveness of exports and boost domestic economic activity especially in manufacturing. One of the problems is that this sort of thing often results in price inflation, often damaging inflation and societal disruption. The last big currency war happened in the 1930s.
Just a few weeks ago many leaders were tentatively looking at what they thought might be more than just a respite in the ongoing European (world) economic calamity. But this storm is far from over. It’s shifting into a new phase as Spain continues to spin out, Italy’s industrial output is the lowest it’s been since its been recording the stat, and even tiny Cyprus is causing real problems.
