Why Bloomberg Is Not The WSJ
While there are many answers to this rhetorical question, a key one is the schism that exists between the two media behemoths when it comes to the topic of the NEW QE, elsewhere incorrectly called QE3. While the now virtually daily missives from Fed mouthpiece Jon Hilsenrath, whom once has to wonder whether he is more of a part time worker at the WSJ or the New York Fed, are there to force markets ever higher each day, with promises that Bernanke will not sit idly by if the S&P were to ever close red (the S&P being a multi-year highs notwithstanding), and that as he stick saved the European close on Friday, the Fed has lots of additional capacity for more QE, Bloomberg actually has the temerity to ask: why do we need any more QE: after all so far all previous iterations have been a disaster. Sure enough, a few hours after Hilsenrath did his latest Fed planted piece in which he amusingly pretended to be objective about more QE and "sized up" costs of more QE, here comes Bloomberg in its daily Brief newsletter, with a far simpler question: why the hell do we keep doing the same idiocy over and over, hoping and praying to generate inflation, knowing full well if we do get inflation, with global central banks soon to hold half of the world's GDP on their books, it will promptly deteriorate to the "hyper" kind.
From today's Bloomberg Brief:
[S]ome of the impact of QE3 is already priced into equity markets. What’s more, investors are unlikely to react as positively as in the past given that previous rounds of QE failed to have a lasting impact. The impact of QE3 on equity markets is also likely to be overshadowed by the crisis in the euro zone, which will probably worsen again before the end of this year and cause a renewed deterioration in risk appetite. As a result, we expect most benchmark stock indices in Asia to finish 2012 lower than where they are now.
QE3 is not a panacea for the U.S. or the global economy, because its effects on the U.S. economy are likely to be relatively small. In particular, previous rounds of quantitative easing worked by lowering long-term borrowing costs and boosting the supply of credit in the U.S. However, borrowing costs are already very low, while the U.S. financial sector is in much better shape than in 2009-10. As such, the U.S. still looks set to experience lackluster growth over the next few years.
Also, QE3 in the U.S. will do nothing directly to address the problems in the euro zone, which have been the main source of concern across the world in recent years. In short, global growth is likely to remain depressed, whether or not QE3 goes ahead. Against this backdrop, Asia’s exports look set to remain in the doldrums.
Hopefully instead of setting up his own irrelevant strawmen, and then knocking them down with a Fed-dictated script, Hilsenrath, and his profound financial journalist experience, can at least pretend to tackle the questions noted above...