Source:Â wikimedia
Dear Diary,
Dow up big time – 259 points, or 1.5%
Gold up too – to over $1,300 an ounce.
This year is going to be a hoot. Boom, bust, lies and claptrap – we’re going to have it all!
What accounts for yesterday’s big bullish surge? From Bloomberg:
The MSCI Emerging Markets Index added 0.8% to 983.53. Russia’s dollar-denominated RTS Index rose the most in the world and the ruble strengthened as the ECB’s move encouraged investors to buy riskier assets.
Gauges in Poland, Hungary and the Czech Republic increased at least 0.9%. Oil producer Petroleo Brasileiro led gains in Brazil. Asian stocks jumped as China pumped funds into the financial system.
ECB President Mario Draghi unveiled a quantitative easing plan of 60 billion euro a month until at least the end of September 2016. The move, which is intended to counter slowing growth and the threat of deflation, may spur capital inflows into developing countries. China’s monetary authority used open-market operations to add cash to the financial system for the first time in a year and spurred loans amid a fund shortage.
Awe and Wonder
Will this bold move help the euro-zone economy? Will it make Europeans richer, happier, better lovers or better sportsmen?
Not if it works like the US version.
The funniest part of this story is that Draghi made his announcement with a straight face. What a comic – a real Leslie Nielsen. As we saw yesterday, the average American is poorer than he was before the QE programs began.
But all over the world, speculators are running wild. In a single day, following Draghi’s big news, they made a cool $1 trillion.
Where does this money come from?
Corporations are not worth a penny more than they were on Wednesday. Why would they be? All that has happened is that the European Central Bank has pledged to use money it doesn’t have to buy assets that are already extraordinarily expensive.
