Opinion on Global Market from Independent Strategy

Independent Strategy's report, Myths and Realities of Luxury Living, is straight and clear:

Current monetary and fiscal policy being adopted by the US and most European governments will fail to lift their economies out of recession.

Because they don't want to clear the market fast. It's too painful.

If the market is not allowed to clear, then the financial crisis will be prolonged.

Then, we will suffer being less but longer painful.

The huge monetary and fiscal stimulus programmes are building up an inflationary surprise down the road.

This is what will be.

The only known price is a market price. All other prices are opinions of interested parties (e.g. bankers and politicians) and are to be mistrusted.

Here the market price is free market price. Nowadays, the governments are so powerful, they can actually create a market price.

Governments have no resources. Any they use to 'solve' the crisis have to be taken from another economic player, normally one that adds more economic value. ...The net balance, however, will be to transfer resources away from more productive users and invest them in low-productivity bailouts and housing.

This is a real problem in the long term. Even the Chinese government will be short of resources as we will see. It might be a good thing on some level.

...,the US will experience a falling national saving rate. This means that an increase in foreign funding will be needed to fund the programmes.

Actually the saving rate is rising fast, without including the government debts. What can we say, it is a virtual fantasy. The real condition is even worse.

QE will fail in the same way if all central bank funding gets stuck in the broken credit machine and does not generate lending to the real economy or even between banks.

QE will fail to solve the problem. But QE will solve the problem a bit, by robbing countries who hold huge foreign reserve, like China, Japan, and oil countries.