Via Ambrose Evans-Pritchard (h/t Researchtime):
(i) “When the next recession comes, it is going to be deeper and last longer than in the past. We don’t have any strategy to deal with it,”… a bleak scenario more akin to the depressions of the 1870s or the 1930s than anything experienced in the post-War era… a decade of super-low interest rates and monetary stimulus by the US Federal Reserve has pushed Wall Street equities to nose-bleed levels that no longer bear any relation to historic fundamentals. Stock prices will inevitably come plummeting back down to earth.
(ii) “The Europeans don’t have a fiscal back-up. They don’t have anything. At least you have your own central bank and treasury in Britain, so you will be happier,”… The eurozone faces an even worse fate when the global cycle turns since the European Central Bank has yet to build up safety buffers against a deflationary shock. The half-constructed edifice of monetary union almost guarantees than any response will be too little, too late.
