As someone who has a VERY long and distinguished record of being wrong, here is my prediction: The CB's and governments of the world will print money (or do the equivalent) in an attempt to keep the current crony-socialist/crony-capitalist financial and government scams going. They have no other choice. The "markets" therefore will be as volatile as the actions of the sociopaths running the CB's and the governments, as there is no “market” other than that created by the central planners. But, let’s offer a “Keynesian” prayer that they can keep the scams going until I’m dead.
Let us pray: We must borrow / print more money to stimulate demand, (especially in assets owned by the top 10%)...So that jobs are created, (but, with the wealth effect, who needs jobs…) And prosperity ensues, (especially for the top 10%)...Then we pay off our loans. (Unless we don’t achieve perpetual “Keynesian” prosperity, I which case we simply borrow / print more money until we do)...May the “Keynesian” hedonism continue forever and ever, in his holy name, Amen. The gap between Wall Street and Main Street (rising asset prices, despite worse-than-expected economic performance) can be explained by three factors. First, the tail risks (low-probability, high-impact events) in the global economy – a eurozone breakup, the US going over its fiscal cliff, a hard economic landing for China, a war between Israel and Iran over nuclear proliferation – are lower now than they were a year ago.
Second, while growth has been disappointing in both developed and emerging markets, financial markets remain hopeful that better economic data will emerge in the second half of 2013 and 2014, especially in the US and Japan, with the UK and the eurozone bottoming out and most emerging markets returning to form. Optimists repeat the refrain that "this year is different": after a prolonged period of painful deleveraging, the global economy supposedly is on the cusp of stronger growth.
Third, in response to slower growth and lower inflation (owing partly to lower commodity prices), the world's major central banks pursued another round of unconventional monetary easing: lower policy rates, forward guidance, quantitative easing (QE), and credit easing. Likewise, many emerging-market central banks reacted to slower growth and lower inflation by cutting policy rates as well.
This massive wave of liquidity searching for yield fueled temporary asset-price reflation around the world. But there were two risks to liquidity-driven asset reflation. First, if growth did not recover and surprise on the upside (in which case high asset prices would be justified), eventually slow growth would dominate the levitational effects of liquidity and force asset prices lower, in line with weaker economic fundamentals. Second, it was possible that some central banks – namely the Fed – could pull the plug (or hose) by exiting from QE and zero policy rates.
This brings us to the recent financial market turbulence. It was already evident in the first and second quarters of this year that growth in China and other emerging markets was slowing. This explains the underperformance of commodities and emerging-market equities even before the recent turmoil. But the Fed's recent signals of an early exit from QE – together with stronger evidence of China's slowdown and Chinese, Japanese, and European central bankers' failure to provide the additional monetary easing that investors expected – dealt emerging markets an additional blow. The scramble for assets, fuelled by the Quantative Easing in the USA and Britain, is coming to an end. The suggestion that the USA was going to 'taper out' its huge QE was enough to send shares into a tailspin, and problems in China are so serious that any sober assessment must factor in the real possibility that the Chinese government might start to sell off its stocks of USA Treasury Bonds to support its banks. In these circumstances the turbulence on international currency markets will be huge, with unpredictable consequences for the value of currencies, trade flows and interest rates. Interesting times are ahead!
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Germany's standard dictionary has included a vulgar English term, used by Chancellor Angela Merkel among others, as an acceptable German word.
Duden, the equivalent of the Oxford English Dictionary in the UK, said it was reflecting the common use of the word "shitstorm" among Germans.
The word, which is used in German to denote a public outcry, seems to have caught on during the eurozone crisis.
German language experts voted it "Anglicism of the year" in 2012.
One of them, Michael Mann, explained in a report by the Local newspaper, that the English word conveyed a "new kind of protest... clearly different in kind and degree from what could be expected in the past in response to a statement or action".
In the past there have been controversies over German usage of words like "download", "job-hopping" or "eye-catcher", the BBC's Steve Evans reports from Berlin.
The new word has crept into the language, imported by people who heard its use primarily in American English, he says.
It is used by the highest and lowest in the land and when Chancellor Merkel used it at a public meeting, nobody batted an eyelid, our correspondent adds.
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