US share and bond prices took off with a bound on Friday as unemployment
figures were released, and were considered to be not quite as bad as they
might have been. This led to mini-euphoria which might -- or might not --
continue next week.
My assessment of those we can call experts on Bloomberg channel in the last
few weeks suggests that something like 70% of those who are interviewed
(particularly investment managers of big pensions funds who need to pay the
already-retired out of earnings, not capital) are desperate, but still
manage to affirm (with much scratching of the head and other non-verbal
give-aways) that things will pick up and all the quantitative easing will
be 'disappeared' in a magical way.
There's about 10% of private equity funders who are still looking (with
increasing difficulty) for firms that are badly managed but recoverable
within a year or two. There's about 5% who go along with Reinhart and
Rogoff in believing that the 2007/8 crash was so severe that recovery could
take many years -- 20 perhaps? Finally, there's about 5% who go along with
Roubini and Eichengreen in expecting, or half-expecting (respectively) a
stupendous currency cash (when dollar inflation finally goes into overdrive
and the other currencies can't catch up).
Those who have not yet appeared on Bloomberg (1% of those above?) are a few
economists who believe that economic growth is coming to an end -- and that
this would have happened even if there had not been a crash. There are
those who think that resource shortages will bring this about. There are
those who think (like Schumpeter) that we are in a high-technology hiatus
and must await a 'new enlightenment' before resuming economic growth. There
are those (one person anyway!) who believe tthat we don't have any more
really novel consumer goods, which being expensive to start with are, have
been status incentives for the past 300 years. We'll continue to spend on
status goods which means the latest car- or clothes-fashions but these
don't have economic 'weight' that drives economicc growth. By now, our
urban (or suburban) way of life gently locks us into a fairly full week of
commuting, work, family life, leisure acitivities.
Whether stock market exuberance will grow next week, we'll have to see. My
guess is that it won't. It's true that China has resumed former high levels
of industrial production, but by now, if it has any sense, China will be
seeking to develop its trade with the rest of Asia, South America and
Africa. China cannot afford to depend on Europe, where production is
declining, nor on America with its fiscal cliff, nor on Japan which is now
trying to break out of its currency trap (perversely it is too strong!)
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