The bond market is showing massive stresses — that’s the first place they usually show up in a crisis. EUR/JPY is a handful of pips away from breaking through the January lows.
The worldwide economy has been in a near-crisis state for 5 years but policymakers always seemed to be on guard. This time, no one seems capable of action.
- Fed: on the sidelines, continually playing down more stimulus
- Congress: incapable of action, election looming
- China: says it will not do stimulus spending
- ECB: tired of acting, pressuring politicians
- European politicians: completely useless
Who does that leave? The IMF is nearly broke and just said it won’t support Spain.
Part of what is scaring the markets is that no one seems capable of action, the gears aren’t even turning.
