“The real concern is that the whole recovery is nothing more than poorly-directed government stimulus which has simply had the effect of boosting asset prices”.
This comes from a European market analyst commenting on the plunge in world stock markets.
The feeling is that the economic recovery’s going nowhere and another round of recession may be on the cards. It’s not helped by the very large debts facing Euroland, as Ireland, Spain, Greece, and Portugal look to be in various stages of unsustainability.
Here in America, the stimulus program has been woefully inadequate and half of it has gone to tax cuts, the least effective form of stimulus.
With a $2 trillion output gap and 10% unemployment, our leaders seem to be more concerned with permanent campaigning. Lots of talk and little action don’t appease voters who are fed up with the lack of coherent economic policy.
The housing sector continues to be blighted, as the Treasury Department seems tone deaf to the idea that prices must fall further, and lenders must take haircuts, until supply and demand get back into something like balance.
Meanwhile, the dollar carry trade continues bubbling along, driving up the prices of commodities worldwide. Absent the US, Japan, and Euroland, the Chinese and the Indians can’t bring the whole world out of the slump because their economies aren’t big enough.
Gorilla says: “The bubble’s gone off the boil, but the anger still simmers!”
