I thought it was political! I totally get that you're confused. And I am certainly in favor of getting rid of QE, just laughing about how all those people who support QE said winding down QE was not only possible without disruption, but likely to be no big deal. Additionally, it is precisely the distortions that are the chickens that'll come home to roost. Hell, I even find it amusing about the whole 6.5% unemployment target - I've got pm's in my box from Fed defenders like yourself back a year ago or so stating that it was good that the Fed finally put some parameters around their criteria for ending QE and normalizing rates, even though I told them back then the goal posts would be moved when it came time. LOL! We're a mere $20B into this and already markets are coming unglued.
The persistent recent weakness of the "unstable" EM currencies in question on a trade-weighted basis is political and structural. The repricing of the USD/EM exchange rates here and now is natural. And, IIRC, I was never a Fed defender who said anything about the ease of winding down QE or the parameters for tightening. For the record, I believe the whole "forward guidance" malarkey is silly and counterproductive.
Martinghoul may not be a fed defender, but I am very much one -- the Bernanke fed that is, not the Greenspan fed. Even though Bernanke was a governor when Greenspan was Chair, these two are as different as oil and water. Greenspan is a "libertarian economist" whereas Bernanke is a "new Keynesian". You can't get much more different than that! Ben Bernanke should be recognized for his outstanding leadership of the fed through an extraordinarily difficult period. And now the tapering is being handled with, again, extraordinary skill. I wouldn't expect anything other than a continuation under the competent hands of Yellen. It was time for a correction in the U.S. Market in any case -- it's healthy.
I didn't mean I am not a Fed defender. Like I have said many times, I am, in fact, a defender of the Fed, but that doesn't prevent me from being critical of some of the Fed's policies.
Did you forget the <sarcasm /> tags? But I think Bernanke has some degree of self awareness. Do you recall his quip? "The problem with QE is that it works in practice, but not in theory". Deep down he knows what's going on. You need to think carefully about why QE is not having any effect on the stock market and in fact never has. Clue: if I buy $10 000 of AMZN, is there an extra $10 000 in the market? No, the cash is pocketed by the seller(s) of the shares.
Agreed. It is, in large part, a correction of the QE period of unnatural risk pricing, or mispricing, as the case may be as QE begins to wind down. Which is, essentially what I have been saying.
You're a Fed defender that rarely criticizes anything the Fed does, and when you do it, you do it so you can say you're unbiased. But that's fine. Piezoe is a clueless academic and a progressive. It's no wonder he likes Bernanke (another academic).
You're wasting your time. I had a debate with Piezoe once on the Fed and it ended with him pretty much dodging the questions on the Fed and QE.
1. The EM's are about, in order: a) South Africa: China's slowdown b) Turkey: Erdogan's an idiot and a fool c) Russia: For Putin, see Erdogan, above. d) Argentina: For Fernandez, see Putin above. Heck for the whole Argentinian political elite, do the same. When is this country not in default? e) India: current account deficit, problem's been building for a while. This is the only one that might have a plausible relationship to QE. f) Canada, Australia, NZ: their currencies have been falling, due, once again, to China's slowdown; they're all commodity dependent countries with relatively small populations. None of them have a crisis going on though, just some indigestion. China's slowdown is hitting commodity dependent countries, and the others are just seeing their dysfunctional political elites doing what they naturally do: wreck their countries. The Fed as scapegoat is just another in the long line of instances of Americans overrating their own importance.