It’s certainly no secret to anyone who frequents these pages that trillions in global QE have failed to engineer a robust worldwide economic recovery. Aggregate demand is still soft and global trade is stuck in what amounts to neutral.
But the world’s central planners have a penchant for Einsteinian insanity and despite the glaringly obvious fact that QE long ago began to succumb to the law of diminishing returns, most DM central banks are ready to enact still more stimulus and persist in ZIRP (and NIRP) in what might as well be perpetuity in a race to the bottom of the effective lower bound and the top of central bank balance sheet lunacy.
In his latest missive, Grant Williams takes a look at the dynamic described above and how “SPECTRE”, “The Special Executive for Continually Trying to Resuscitate the Economy” (an amusing take on the villainous cabal from the Bond films) has gone about trying to “fix” it for going on seven years now.
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From Grant Williams [9]
Ladies and gentlemen, I give you SPECTRE - The Special Executive for Continually Trying to Resuscitate the Economy.
This shady organization operates in plain sight but wholly above the law and, though the international flavour of its executive board is consistent with Fleming’s criminal franchise, the public face of SPECTRE shifts regularly.
In short, not the sort of people you’d choose to do business with.
Back in 2008, in the midst of a crisis of global proportions, Ernst Stavro Paulson and the enigmatic Dr.Yes brought SPECTRE out of the shadows and into the collective conscious of the world. They did so by seemingly offering a cunning solution to the fears that gripped mankind in the wake of the GFC—free money!
Since then, an ever-widening group of SPECTRE luminaries has worked tirelessly to increase their grip on the world and to achieve their stated aim of world domination resuscitating the global economy.
With Paulson & Dr. Yes now seemingly retired (presumably, the SPECTRE pension plan is both defined benefit and, at the very top levels, extremely generous), it has fallen to the organization’s #3, Emilio Dragho to take the reins—aided and abetted by the fearsome Rosie Outlook—and their lieutenants stationed in places as far-flung as London and Tokyo.
But can the modern-day SPECTRE achieve their aims or will they, like Fleming’s villainous cadre be foiled—not by 007, but rather a global economy that simply refuses to bend to their will and get off its knees?
[...]
Rather than focusing exclusively on ‘growth,’ there are a great many ways of measuring economic ‘health’ and those benchmarks are perhaps a better indication as to what lies ahead.
In the US, for example, the ground level data have been fairly poor.
Manufacturing ISM is barely above recession levels and, while non-manufacturing has been strong in recent months, the divergence between them is a worrying sign given their tight historical correlation.
[10]
[...]
It’s beneath the surface where the real disconnects between perception and reality lie and there is nobody better at not only identifying such misalignments, but putting them in the perspective they so desperately need than the brilliant Stephanie Pomboy of MacroMavens who this week has very kindly allowed me to share a few short excerpts from a recent piece she published.
It was Stephanie’s final chart which had me breathing into a brown paper bag like a dowager having an attack of the vapours. Pray silence for the inventory-to-sales ratio:
[11]
[...]
[Before] I move a little farther down the list of those economies supposed to do the heavy-lifting in the next couple of decades, a few more observations as to the real health of the US:
[12]
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