Submitted by Tyler Durden on 04/10/2012 08:06 -0400
Bob Janjuah, who has been quiet lately (recall his last piece in which he quite honestly told everyone that “Markets Are So Rigged By Policy Makers That I Have No Meaningful Insights To Offer“), is out with his latest, in which he gives us not only his long-term preview, “ultimately I still fear and expect the S&P500 – as the global risk-on/risk-off proxy – to trade at 800, and the Dow/Gold ratio to hit parity (currently at 8, down from an all-time high of 45 in late 1999) before we can begin the next multi-decade bull cycle“, but also his checklist of 8 things to look forward to in the short-term centrally-planned future.
From Nomura’s Bob Janjuah
Please sir, can I have some more?
The current monetary policy settings in the US and Europe – which in my last note I dubbed monetary anarchy – continue to drive markets. While some may feel that central bank behaviour and experimental policies designed largely to boost markets is a good and desirable thing, I have little doubt that such ‘economic policies’ are already sowing the seeds of our next economic and markets malaise. I continue to believe strongly in the view that central bankers are intentionally mispricing the cost of capital, in an attempt to push the private sector to misallocate capital into consumption and into asset purchases at the wrong time and at the wrong price. Eras of such marked misallocations of capital normally end with bubbles that burst significantly. Central banks have shown us, time and again, that they are extremely good at driving bubble formation, that they are extremely good at denying their real motivations, and that they are extremely good at denying the existence of bubbles. History of course also shows us, over and over again, that bubbles are the direct consequence of central bankers mispricing capital, and history of course shows us that central bankers are largely impotent when it comes to preventing the significant bursting of said bubbles.
I think pump-and-dump policies, which have driven the Western cycles of print/borrow/consume over the last 20 years – and in particular over the last 10 years – are an undeniable economic failure. What is even more concerning to me is that, even after everything we have been through, the policymaker solution for our current sickness is more of the same – more debt, more liquidity, and more consumption! The West is in the midst of a multi-year era of declining living standards, in large part as a direct consequence of central bankers and their bubble blowing machines. I think sometimes those focused on markets and how to make the next buck out of the Fed/ECB ‘put’ should remember that, for example, it is at least in some part as a direct consequence of the Greenspan and then the Bernanke policy ‘puts’ that tens of millions of American citizens are either homeless and/or on food stamps. When the current post-2008/09 bubbles burst, central bank ‘puts’ and the arrogance we perceive that still persists in some parts of the financial sector will hopefully be consigned to the deep freeze box for a very long time.
Moving onto the more tangible near term: