......and the worthless Keynesian's are all but admitting that easing will not work!
Central bankers are finding it easier to support their economies than to spur expansion as the prospect of Japanese-like lost decades looms across the developed world.
Another round of loosely correlated global stimulus has begun after the Federal Reserve extended its Operation Twist program and counterparts from Japan to Europe consider more monetary easing of their own.
The rub is that even as they renew their rescue efforts, policy makers are postponing forecasts for fuller recoveries and run the risk that their latest actions pack a smaller punch. This raises the prospect of longer-term anemic expansion akin to the doldrums Japan has suffered since the early 1990s.
The combination of economic weakness and policy indecisiveness leaves Jan Loeys, chief market strategist in New York at JPMorgan Chase & Co., recommending gold and U.S. assets, on the hope of greater quantitative easing, and shying away from peripheral Europe’s bonds and stocks that traditionally benefit from output growth.
Investors should “position for further monetary action, even if it doesn’t do enough,” said Loeys, whose colleagues anticipate worldwide expansion of 1.4 percent this quarter --the weakest since the end of the 2009 recession.
“From a global point of view, those willing to do something probably don’t have a lot of impact, and the rest who can do something are reluctant,” he said.
Almost five years after central banks first sprang into action to buoy the world economy, they are being forced to react to a third successive annual fading of recovery hopes as Europe’s debt crisis threatens to engulf Spain and Italy, hiring in the U.S. stalls and China slows.
Governments have “cornered” central banks into prolonging stimulus, and have dragged their feet on restoring fiscal order, said the Basel, Switzerland-based BIS, which holds currency reserves on behalf of global central banks. Monetary policy only“buys time” in the short run for leaders to act, and leaving an easy stance for a prolonged period poses economic risks, it said.
Even so, both the Fed and White House repeatedly have scaled back growth forecasts since the recession ended in June 2009. The latest cut came last week, when the central bank lowered its projections for this year and next. Recession is coming....if we are lucky it will only be a recession and nothing worse. But that slight stench in the air smacks of 'depression'. No wonder I enjoy the smell of napalm in the morning and continue to hector one and all....blow off EVERYTHING and hold physical gold and silver and only be invested in the right gold juniors.