There is hardly ever a dull day on the worlds equity and bond markets. Late last week amid some some gloomy reports on developing country markets and less bullish news about China’s growth rate traders and hedge funds rushed to unload some of their holdings and short sell others. The result -not a surprise- the Dow lost over 300 points in Friday’s trading.However today after a slow start the Dow is currently at 3:23 in the afternoon up 42 points and the panic is subsiding. There is quite possibly going to be slower growth but the overall recovery should continue and if appropriate policy is implemented even strengthen. So long as governments avoid the siren call for austerity.It is this mistaken policy and the widespread erroneous belief that QE will result in serious inflation even in current circumstances that lies behind this nervousness and short term thinking in the markets.
I could be wrong but I don’t believe that markets will be excessively bearish for very long.
About haroldchorneyeconomist
I am Professor of political economy at Concordia university in Montréal, Québec, Canada. I received my B.A.Hons (econ.&poli sci) from the University of Manitoba. I also completed my M.A. degree in economics there. Went on to spend two years at the London School of Economics as a Ph.D. student in economics and then completed my Ph.D. in political economy at the University of Toronto. Was named a John W.Dafoe fellow, a CMHC fellow and a Canada Council fellow. I also was named a Woodrow Wilson fellow in 1968 after completing my first class honours undergraduate degree. Worked as an economist in the area of education, labour economics and as the senior economist with the Manitoba Housing and Renewal Corporation for the Government of Manitoba from 1972 to 1978. I also have worked as an economic consultant for MDT socio-economic consultants and have been consulted on urban planning, health policy, linguistic duality and public sector finance questions by the governments of Manitoba, Saskatchewan,the cities of Regina and Saskatoon, Ontario and the Federal government of Canada. I have also been consulted by senior leaders of the British Labour party, MPs from the Progressive Conservative party, the Liberal party and the New Democrats on economic policy questions. Members of the Government of France under the Presidency of Francois Mitterand discussed my work on public sector deficits. I have also run for elected office at the municipal level. I first began to write about quantitative easing as a useful policy option during the early 1980s.
haroldchorneyeconomist 