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11-03-2014, 01:42 PM
As I have long said, apart from slamming the obvious, noone has come up with an alternative policy that will stop the world keep heading down the divisive track... cant beat them join them
Read more: http://www.smh.com.au/business/markets/c...z2vd5FAtgM
Central banks vs the real economy
Date
February 7, 2014
Read later
Vesna Poljak
Peter Schiff & Marc Faberoutsiderclub.com/Marc_Faber
They Know What's About To Happen & You Need To Listen. Free Report
Marc Faber, investment analyst, speaks during a television interview in New York, U.S., on Monday, May 10, 2010. Faber, the publisher of the Gloom, Boom & Doom report, said the European Union-led bailout deal for Greece will only postpone Greece's problems. Photographer: Jonathan Fickies/Bloomberg *** Local Caption *** Marc Faber
“Central bankers are completely insane,” says Marc Faber. Photo: Jonathan Fickies
Marc Faber, the original “Dr Doom”, has lashed out at central bankers for being out of touch with reality and stimulating asset bubbles that are socially divisive by pumping out trillions of dollars in monetary stimulus since the financial crisis.
“Central bankers are completely insane,” he said, speaking to The Australian Financial Review from Thailand. “These are people who are professors, academics who never worked a single day in their life in an ordinary job. Because money printing doesn’t help ordinary people . . . it helps asset prices.”
My sense is that central banks are unlikely to tighten because they’re in such deep Sh** already.
Dr Faber is a Swiss economist and the publisher of the Gloom, Boom, Doom report. He made a reputation for himself calling the Wall Street crash of 1987 and is known for his bearish predictions.
His comments highlight the risk that central banks, through their ultra-stimulatory policies, enrich only asset owners by inflating the prices of stocks and property. It’s not the first time that an economist has slammed quantitative easing (QE) as being socially inequitable but Dr Faber’s comments come at a time when the United States Federal Reserve is unwinding its $US3 trillion-plus stimulus and stirring ructions in global markets.
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QE has supported fresh records for sharemarkets around the world, including the S&P 500, but some experts are worried the run-up in stock prices has exceeded corporate earnings growth and stocks could be vulnerable without the support of stimulatory policy.
The Fed has not ruled out increasing stimulus as the “taper” runs its course even though it elected to reduce its monthly bond purchases in the past two Fed policy meetings. Economists expect that other central banks, possibly including the European Central Bank, might have to return to monetary stimulus – or printing money – this year if their economies falter. The Bank of Japan has a QE program under way.
“My sense is that central banks are unlikely to tighten because they’re in such deep Sh** already and they will continue to print,” said Dr Faber, who is concerned about the risk of credit bubbles. But he was almost as critical about the years of inaction from central banks in emerging markets, which in the past fortnight have rushed to raise interest rates to stabilise their currencies and control inflation.
“What the central banks in emerging economies missed is that they should have slowed down their economies and credit growth two years ago and taken some pain,” he said. “Basically central bankers are Keynesian, they believe in intervention but what they never do is cool down the system.” John Maynard Keynes believed that governments should run deficits when times are tough.
Dr Faber’s concerns about credit bubbles are shared by Andy Xie, an independent economist and China expert.
“The real deal is when a credit crisis breaks out in a real economy. For example, as India raises interest rates to stabilise the currency, the banking system comes under stress. When the interest rate rises above nominal GDP growth rate, the system may hit a wall,” Dr Xie warned. “Australia is another candidate in that regard. The zero rate environment since 2008 has made it easy to hide skeletons in the closet. When the tide goes the other way, the skeletons come out.”
He described market turmoil over the past 48 hours as “a risk-off thing, though bigger than usual”.
The Australian Financial Review
Read more: http://www.smh.com.au/business/markets/c...z2vd5FAtgM
Central banks vs the real economy
Date
February 7, 2014
Read later
Vesna Poljak
Peter Schiff & Marc Faberoutsiderclub.com/Marc_Faber
They Know What's About To Happen & You Need To Listen. Free Report
Marc Faber, investment analyst, speaks during a television interview in New York, U.S., on Monday, May 10, 2010. Faber, the publisher of the Gloom, Boom & Doom report, said the European Union-led bailout deal for Greece will only postpone Greece's problems. Photographer: Jonathan Fickies/Bloomberg *** Local Caption *** Marc Faber
“Central bankers are completely insane,” says Marc Faber. Photo: Jonathan Fickies
Marc Faber, the original “Dr Doom”, has lashed out at central bankers for being out of touch with reality and stimulating asset bubbles that are socially divisive by pumping out trillions of dollars in monetary stimulus since the financial crisis.
“Central bankers are completely insane,” he said, speaking to The Australian Financial Review from Thailand. “These are people who are professors, academics who never worked a single day in their life in an ordinary job. Because money printing doesn’t help ordinary people . . . it helps asset prices.”
My sense is that central banks are unlikely to tighten because they’re in such deep Sh** already.
Dr Faber is a Swiss economist and the publisher of the Gloom, Boom, Doom report. He made a reputation for himself calling the Wall Street crash of 1987 and is known for his bearish predictions.
His comments highlight the risk that central banks, through their ultra-stimulatory policies, enrich only asset owners by inflating the prices of stocks and property. It’s not the first time that an economist has slammed quantitative easing (QE) as being socially inequitable but Dr Faber’s comments come at a time when the United States Federal Reserve is unwinding its $US3 trillion-plus stimulus and stirring ructions in global markets.
Advertisement
QE has supported fresh records for sharemarkets around the world, including the S&P 500, but some experts are worried the run-up in stock prices has exceeded corporate earnings growth and stocks could be vulnerable without the support of stimulatory policy.
The Fed has not ruled out increasing stimulus as the “taper” runs its course even though it elected to reduce its monthly bond purchases in the past two Fed policy meetings. Economists expect that other central banks, possibly including the European Central Bank, might have to return to monetary stimulus – or printing money – this year if their economies falter. The Bank of Japan has a QE program under way.
“My sense is that central banks are unlikely to tighten because they’re in such deep Sh** already and they will continue to print,” said Dr Faber, who is concerned about the risk of credit bubbles. But he was almost as critical about the years of inaction from central banks in emerging markets, which in the past fortnight have rushed to raise interest rates to stabilise their currencies and control inflation.
“What the central banks in emerging economies missed is that they should have slowed down their economies and credit growth two years ago and taken some pain,” he said. “Basically central bankers are Keynesian, they believe in intervention but what they never do is cool down the system.” John Maynard Keynes believed that governments should run deficits when times are tough.
Dr Faber’s concerns about credit bubbles are shared by Andy Xie, an independent economist and China expert.
“The real deal is when a credit crisis breaks out in a real economy. For example, as India raises interest rates to stabilise the currency, the banking system comes under stress. When the interest rate rises above nominal GDP growth rate, the system may hit a wall,” Dr Xie warned. “Australia is another candidate in that regard. The zero rate environment since 2008 has made it easy to hide skeletons in the closet. When the tide goes the other way, the skeletons come out.”
He described market turmoil over the past 48 hours as “a risk-off thing, though bigger than usual”.
The Australian Financial Review