Pernicious Cycle of Global Deflation on Horizon by AL MARTIN (AL MARTIN RAW)
(11-8-13) The European Central Bank (ECB) caught markets off-guard this week by cutting their benchmark rates a quarter of a point and also talking about accelerated LTRO (Long Term Reserve Operation) which is their equivalent of yet another huge quantitative easing move.
So what do the central banks see that markets and governments don't -- that suddenly they're getting so aggressive in pumping ever more monetary stimulus into the global Hopium cloud?
They see a pretty bleak picture coming in 2014, so they're getting increasingly desperate now. The Bank of England is the holdout and it won't cut rates because of their own domestic inflation problem. The ECB's move certainly smacks of desperation.
This urgency to back-pedal by the Fed governors regarding "tapering" has thrown into the markets this concept that QE 3 is never going to end.
In other words, the moves we've seen in the last two days are the opening salvo of Japanizing the global economy. Markets have had a tremendous response to this in that they got hit all over the world.