Earlier this year, for a brief period, it looked as if America might be in some kind of recovery and so would need no more QE; as if eurozone leaders were beginning to grasp the enormity of their situation; and as if the great bear market in equities might be coming to an end. Unlikely as it sounds, I even have a vague memory of writing a vaguely optimistic article myself.
It’s over now. With the arrival of ‘QE infinity’, it is clear (surely) to everyone that our politicians are making it up as they go along – and the bears are back on form. Policy these days, says Peter Bennett of Walker Crips Stockbrokers, and that of QE in particular, is like “an army on the run”. The generals “get the troops to spray bullets at random in the rough direction of the enemy and pray one or two hit”.
It is an approach that not only means the retreating troops are regularly hit in error (think of the way in which near-zero interest rates slam the incomes of our pensioners), but which also provides us with endless market distortions. It gives us US equities that are 50% overvalued on long-term valuation measures.
• Read the full editor’s letter here: Infinitely stupid.