Grant Williams ASFA 2013: Asset Bubbles And The Impurities Of QE

Speaking at the ASFA 2013 in Perth, Grant Williams offers a few warnings about the precarious nature of our markets. Poking a bit of fun at Australia’s central bank, Williams noted the real message that Glenn Stevens was shouting…

“I need somebody – ANYBODY –  to raise their interest rates because I can’t lower mine any more.  But it’s GOT to be someone important. No, not you Brazil. And it’s not just me, you know? Other countries are in just as much trouble as we are. Honest”

Stevens’ predicament is the same a all of the other desperate central bank clowns.  In the middle of a global currency war, central bankers are loath to disrupt the markets, and particularly the banking class. No one in the current class of central planners wants to make the hard choices and end the party.  Instead, current policy is to pull more future growth forward to paper over previous frauds and mismanagement.  The solution offered the Fed and other central banks is to levitate markets for as long as possible and hope the problems eventually go away.

Unfortunately, bubbles are nothing new for central bankers. Blowing asset bubbles seems to be what they do best.

bubbles

The bubbles blown by central bankers across the globe are certainly causing distortions in real estate prices. Looking at countries like Canada, Norway, Australia and the UK, it’s clear that home prices have become detached from historical fundamentals. In cities like London, speculation and an influx of foreign buyers is the new normal

deviation

And no, this time is not really different.  We’ve been here before…

history

aaronlaymanGrant Williams ASFA 2013: Asset Bubbles And The Impurities Of QE

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