The Dow is still pushing higher. Gold is back below $1,200 an ounce.
The US economy appears stable. The stock market – which is supposed to know all, see all and understand nothing – tells us it is clear sailing ahead.
We are fools to believe it; perhaps we are fools if we don't.
We can almost hear former governor of the Reserve Bank of Zimbabwe Gideon Gono's phone ringing. He quiets his wives so he can hear. It is a voice with a strange accent… speaking from far away.
“Can you come give us some advice?”
Once again, the Japanese economy has slipped into a coma. And once again, the stimulus policies of the central bank… and the Ministry of Finance… have failed to revive it.
New York Times columnist and Nobel laureate economist Paul Krugman has gone to advise Shinzō Abe on how to deal with its latest crisis.
Could Abe find anyone worse to give him counsel?
That would be the aforementioned Mr. Gono.
The Curse of Weak Demand
Japan is Exhibit A for the central planners' argument that the world lacks demand.
Chief economics commentator for the Financial Times Martin Wolf made the case for it in Wednesday's edition. “The curse of weak global demand,” is the headline.
Why is weak demand a curse? How much demand should there be? Why is the demand given us by willing consumers and businessmen “too much” or “too little”? And how could there ever be more demand than there actually is?
Never mind. When there is not enough of it to suit their tastes, the central planners think they know how to get more. Wolf: “unconventional policy choices, probably more unconventional than those they have tried so far.”
We doubt Krugman urged Abe to try more unconventional policies. More likely, he argued for more of the same old hopeless elixirs that have left the patient as stiff as a board.