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Niall Ferguson: More Stimulus = Bubbles in EMs

From Zero Hedge: Niall Ferguson Explains Why Keynesian Policies Are Dooming The World Economy To Round After Round Of Asset Bubbles

The important bit – and man, is this guy a clear thinker:

Globalization has not broken down. In fact the US economy is more open than it has ever been. That means that stimulus, both monetary and fiscal if very prone to what is called leakage. We’ve had an enormous of stimulus in the US, it’s the biggest fiscal stimulus in the world, and huge unprecedented monetary stimulus. What’s been stimulated? Not jobs in Michigan. What’s been stimulated has been commodity markets and emerging markets. Because the liquidity just leaks out, and that’s why another round of stimulus would not stimulate in the promised way. It would stimulate the wrong things. And those things, commodity markets and emerging markets, are already overstimulated to the point of being nearly bubbles.

  • Anonymous says:

    >US is the biggest Currency Manipulator being in the Driver's Seat with Reserve Currency Advantage. Basically the Stimulus Money is going to Richer Section of US Population who want more yeilds which they are obtain only in Emerging Markets and Commodities. Common Man in US (90%) do not have any US treasuries or Fennie Mae Bonds which are being purchased by Helicopter Bernanke.

    MK

  • Anonymous says:

    >http://yglesias.thinkprogress.org/2010/07/niall-ferguson-debates-himself/

  • Anonymous says:

    >I will not be surprised if US and World Markets drop after Nov. 3 meeting as FED QE2 may not meet market expectation. Seems like backdoor agreement has been made between US and china and hence QE2 would be only moderate. Could be a good trading opportunity.
    MK