And now it's official. QE2 is a FLOP! Here's the report from The New York Times:
Sovereign debt concerns and the prospects for slower growth in Europe and Asia took their toll on global markets.
Analysts said recent news from Europe had not instilled confidence in the Continent's ability to handle its fiscal challenges. Last week, Fitch Ratings downgraded Greece's credit ratings by three levels to B+, a rating that is below investment grade. Standard & Poor's lowered its outlook on Italy's debt to negative from stable over the weekend, citing a weaker outlook for growth and lower prospects for the country's ability to trim its debt.
Yeah. The problems are all in Europe. If it weren't for the Greeks, and Italians, and Spaniards...it would be clear sailing here in the US.
But the main difference is probably that the Europeans don't cheat as much as we do. For example, unemployment in Spain is terrible, at 17% according to the figures we saw for March.
But wait, Yale economist Robert Shiller says unemployment in the US is miscalculated. It's really almost 16%. Not much difference with Spain.
Meanwhile, fire off a gun in Las Vegas and you're going to hit a homeowner who is underwater. Almost 3 out of 4 of them are below the surface. And get this...house prices are dropping at the rate of about 1% per month, according to the aforementioned Mr. Shiller.
The Spaniards also have to own up to their problems. They can't print money. They're on the euro, a currency controlled by the European Union...which is to say by France and Germany.
You may say, being on the euro 'limits Spain's policy options'. You may say that Spain is in a 'straitjacket' put on it by the larger economies of the Union. You may say that Spain would have an easier time of it if it still had the old, more flexible Spanish peseta.You would be right. But you would be a moron.
The whole point is that there are some things that it is better NOT to have the easy, fun, devil-may-care option. Ask Dominique Strauss Kahn. Ask Arnold Schwarzenegger.
Take DSK, for instance. We'll bet he wished his wife had accompanied him on his business trip. If so, he might still be head of the IMF...diddling poor countries, rather than poor chambermaids!
Yes, dear reader, there are some options you're better off without. Printing money - with nothing to back it - is one of those things.
But wait. You say the Fed's money printing (otherwise known as QE2) has been a success? Think again. We've been saying for months that it won't work. Now, even the mainstream press is catching on.
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