Posted on 08/23/2012 11:10:04 PM PDT by bruinbirdman
All three major blocs of the world economy have shifted gears dramatically over the last month, preparing a fresh blast of stimulus to combat the sharpest contraction in global trade since the 2008-09 crisis.
The US Federal Reserve appears poised for a third round of quantitative easing (QE) as soon as early September, joining Europe and China in concerted global stimulus.
The Fed’s latest minutes show broad support for fresh bond purchases – probably mortgage bonds – unless signs of “substantial and sustainable strengthening” emerge soon. Paul Ashworth from Capital Economics said QE3 looks like a “done deal” since little is likely to change between now and the next Fed meeting.
The shift in Fed policy caught markets by surprise and comes after the European Central Bank’s chief Mario Draghi opened the door to potentially “unlimited” purchases of Italian and Spanish bonds to prevent a euro break-up.
The most radical moves appear likely from China where the managed “soft-landing” risks spinning out of control, with exports contracting on a month-to-month basis over the summer.
“People should worry less about Europe right now and look more closely at Asia,” said Hans Redeker, currency chief at Morgan Stanley. “We think the Bernanke and Draghi 'puts’ will drive a further rally in global equities. But China represents the biggest risk to our bullish asset call.”
The move to full throttle by global authorities comes as the latest shipping data confirmed fears that large parts of the global system buckled in the mid-summer.
“Global trade is contracting at the fastest pace since 2008,” said Stephen Jen from SLJ Macro Partners. “The exports of Korea, Taiwan and Japan are contacting, and China is in stark deceleration.”
Container shipping volumes to Europe fell 9pc in June from Asia and 7.5pc from North America
(Excerpt) Read more at telegraph.co.uk ...
but housing news is reportedly a bright spot.
What happened to “the private sector’s doing fine?”
LLS
“the system” unfortunately is not capable of addressing the fact that deficits are a measur elf the usefulness of the present government models (all basically one form or another of Socialism) to the people around them
Government under this modern model, is a little more than an organized plundering cartel.....raping the populace and then standing around wondering why there is not enough productive activity to generate functional, useful community institutions.
” measure of the usefulness”
When the inevitable inflation occurs after Bernanke’s dollar-printing orgy, we can at least use those dollar bills as toilet paper. They’ll be cheaper than Charmin.
We're in it already. A trip to the supermarket confirms it.
Leni
You can't buy a quart of mayo. It is 30 oz.
Heck, the 5# bag of sugar is gone the way of inflation. It is now 4 pounds.
yitbos
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