From Blackswan Capital.
The reason QE1 and QE2 have not worked as we are told it was supposed to work, is because the credit transmission mechanism in the US economy and in Europe, and increasingly in China, is broken. Instead of credit transmission, the three biggest regions of the world, call them the G-3, are in financial repression mode doing all they can to save the existing order first, only to worry about new growth later.
QE3 will fail, as QE1 and QE2 have. The conditional bond buying in Europe will fail, as the LTRO has before it. And another round of bank lending in China will also fail to rekindle new growth. But in the near-term, if you are long financial assets, you don’t really care do you? Well you better care. Because the disconnect between what is going on in the global economy, in terms of real growth versus financial bubbles being created by financial leakage an dismally failed Keynesian demand management may be setting up for something epic in proportion.
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