Japan has literally tried everything (including bringing in Krugger) and yet reflating their markets has been a continued failure...
Exactly.... Why anyone was surprised by last night's decision is beyond me...how many years of stimulus and historical low rates does an economy need until you just say you know what this isn't working.....same thing here...today's GDP figure proves that Everything the fed has done and is doing is proving to be a complete failure.
"Why anyone will be surprised?" Because the world is run by people who only care how their decisions "look". And so the NYC pension fund is getting rid of all hedge funds. And the Japanese pensions buy equities. For all the warning that past performance is not the future, the boards of these pensions used an advanced asset allocation technique called "Excel sorting", although I am not sure if they even have Excel. Pick the best performing last year and say "why do we not have more of that". Pick the poorest performing and say "why do we need hedge funds"? And then they can all look smart, and go home happy. And then they can claim to be "surprised", but at least they did everything "to the best of their knowledge".
The world is actually run rather stupidly... all my life I was wringing my hands and trying to tell people how to be smarter. I finally get it: they don't want my advice, they want to eat sugar, believe everything their doctor says and get free meds. They want to follow the conventional wisdom no matter what because there is comfort in numbers. They think that we must be smarter than before so history won't repeat itself but it does, in fact, repeat endlessly. I've concluded that the way to go is to be on the right side of the trade, never mind all the stupidity that leads up to it, just be on the right side of the trade, take the gains and enjoy your life.
No amount of QE can fix the GDP. You can't increase the GDP when you have no "domestic products" any more. I agree we need to tax imports to the point manufacturing is brought back to the US.
I hope that those central bankers have an accurate growth model for a decade of ZIRP. Common sense is telling me that the boomers may be reaching a tipping point here. After years of ZIRP and seeing low equity returns recently, I think they may start seriously cutting back on spending. They are starting to doubt that their assets will produce enough to live on in retirement. If they start deciding en masse that they need to save more, these low interest rates may cause a drag instead a stimulus on the economy. The ZIRP caused them to move into equities. Now that equities have stalled what will these boomers do to keep their retirements on track? Will they have blind faith and do nothing? Or will they start to get worried and cut their consumption?
Seriously cutting back on spending is a slap in the face to the FED, will not be tolerated and will be punished. Use it or lose it.
Manufacturing will never be brought back to the US, its great to think that possibility but every major company and even the smallest of businesses look for ways to cut costs and have high profit margins and the way to do so is to keep "made in China" on all the products we sell here in america
This has already occurred, hence the tepid growth from 2008 onwards...Its also responsible for the number of boomers who either never leave the workforce OR come back into the workforce and take the jobs that were normally reserved for the post college graduate crowd... The effects of nearly a decade of ZIRP will never be studied because it is an uncomfortable departure from the "narrative". The reality is that most of the individuals in the boomer demographic or above never stepped foot back into equities post-2008...Why would they? Twice burned in less than a decade and they are supposed to go for the trifecta of bubble/busts...Hence, why there have been equity outflows the entire ride higher...I don't doubt for a minute that they stretched for yield in junk bond funds, etc since treasuries/notes etc weren't giving enough yield...To make matters worse, those outflows from 2009 onwards represent a significant decline in principal balances, so going forward there is simply that much less demand... My own take on this matter is that the "public" employees have replaced the consumption trends of the dwindling "private" employees that have been consumed by ZIRP and stealth inflation...If you look at those employment trends going back some twenty-odd years, you'll notice that the decline in solid white color private sector employment has been replaced by exponential growth in the public sector (heck we created entirely new agencies in the past two decades)- i.e. D.C. area concentrated...nonetheless, public sector arrangements ensure that the "defined benefit plans" of yesteryear enable these employees to spend freely with current income and they do not have to put aside significant chunks into savings (i.e. ridiculously generous retirement plans and benefits)...Without this growth in the public sector and without overly generous COLA agreements, the spending cliff dive would have been even more pronounced.