Mr. Bernanke Has To Know!

By: Ian Campbell | Tue, Jul 31, 2012
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Mr. Bernanke has to know in the face of (among many other things):

that a continued strategy of 'more quantitative easing' can't restore America's economy to what it was (or latterly 'appeared to be') prior to 2008.

Notwithstanding, for some months now I have said in these Newsletters that QE3 (which is really a misnomer because QE has never really stopped in its various forms since 2008) can be expected in 2012. It looks like the 'time may be coming nigh'.

If this week Mr. Bernanke makes an announcement of QE3, or fails to make an announcement of QE3, watch the reaction of the financial markets carefully. It is highly likely they will respond positively if he does, and negatively if he doesn't. This means the financial markets are, in the short term, detached from value fundamentals - or so I think - and that the game of musical chairs continues.

Context: If one assumes ongoing quantitative easing will not result in meaningful long-term economic recovery, long-term 'investment markets' ought not to respond positively to it.

Topical Reference: Jobless rate pressures Fed toward providing more stimulus, from The Globe and Mail, July 29, 2012 - reading time 3 minutes.

 


 

Ian Campbell

Author: Ian Campbell

Ian R. Campbell, FCA, FCBV
Economic Straight Talk

Through the Economic Straight Talk Newsletter Ian R. Campbell shares his perspective on the world economy, the financial markets, and natural resources. A recognized business valuation authority, he founded Toronto based Campbell Valuation Partners (1976), Stock Research Portal (2007) a source of resource companies market data and analytic tools, and Economic Straight Talk (2012). The CICBV* annually funds business valuation research in his name**. Contact him at icampbell@srddi.com.
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