Despite “the most inappropriate monetary policy in history,” and warnings of bubbles, Bloomberg notes that South Korea’s ‘surprise’ rate cut overnight was the 511th reduction worldwide since June 2007 (and show no signs of stopping the Einsteinian madness). Behind the stepped up stimulus: another swoon in the global economy barely five years after it fell into its deepest recession since World War II. Citi’s G10 Macro surprise index shows that the major economies began coming in below forecasts in the middle of March and the index is now near its weakest since last August.
Maxed-out budgets mean governments are also struggling to aid their economies and Central Bankers are growing impatient. As Philly Fed’s Charles Plosser told Bloomberg TV today that it is “disturbing” to him that “more and more is being expected of central banks.” PIMCO’s El-Erian explained recently that “central banks are our best friends because “they can only get to their macro objectives by goping through the markets.”
Hope remains that fundamentals will catch up to these actions – but as the chart below shows, it is not. Still, the burden remains on the CBs, “we are expected to solve all the world’s problems,” Plosser added, “our fiscal authorities are not doing a very good job in any country.”