STEPHEN ROACH: QE WON’T WORK
12 October 2010 by Cullen Roche
8 Comments
At least one analyst out there actually understands how QE works. Stephen Roach of Morgan Stanley says that QE is one big waste of time. He understands that global imbalances can’t be resolved with kick the can policies.
Source: CNBC
OK, as far as the QE goes but Mr. Roach is a central planer. He wants central policies that will encourage savings in the USA and encourage consumption in China. The world imbalances are due to government interventions. On the US side we have property tax rebates and over engorgement of home ownership. But, let’s not forgive the biggest creator of imbalances – China. Why not just let the free market set the exchange rate?
I think the point here is that the adjustment needs to be done slowly due to the distortions that affect the market at the moment. If the training wheels (peg) were to be taken off the Yuan right now it would cause massive problems.
The QE’s may not work, but they sure will distort things for a very long time. Get ready for several years of the markets as one big ponzi scheme. The problem is, ponzi schemes never end well.
He said QE won’t work, he was not saying QE won’t move stock higher. TPC, you are confusing these two I’m afraid, the two are completely different and not necessarily correlated as Marc Faber pointed out.
True, but if the Market truly moves 6 months in advance QE 2 very well could have stopped a complete market collapse that started in April. – 6 Months ago. In which case WE ARE AT THE TOP OF THE ADVANCE. Thats a scary thought. QE2 is already built in. Will we see QE3 6 months from now STARTING TODAY?
they’ve bought the irrational rumor…..can anyone doubt they will not sell the news?…..and most definitely the results……
This is quite correct except that it’s even more dire than even Roach lays it out. He says: “do you think American families are just gonna say we’ve got a lot of money” – news flash, they don’t, “let’s just go back into debt again” – they’re still in debt so “again” is wishful thinking in and of itself, “let’s squander our savings” – what savings?
Actually, RoKoa, he is saying what you said, i.e. that US families DONT have the money (savings) and WON’T go deeper into debt even if given easy credit.
Theyve had their wake up call – and heard it loud & clear. Unlike the government…