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Carlo Pelanda: 2014-7-0H Edition



Market Moment Time for a Qualitative Easing

Market operators tend to think in a short-term horizon. But in specific moments long-term prophecies can have an impact on the market level of confidence. This moment is fast approaching. Following from the 2008 crisis, the recovery period is coming to an end thus enabling a re-assessment of what will be the next major change to occur.
Gaining ground in the media, the search for new trends will find a set of pessimistic prophecies:
(a) the "new normal" prophecy is based on the idea that America and Europe will never find strong growth dynamics and are condemned to a permanent stagnation.
(b) the "technological disintermediation" scenario assumes that the new robots and ICT systems will kill most of the jobs.
(c) the "post-democratic" prophecy predicts the degeneration and implosion of democracies.
As a director of a research group devoted to the analysis of future trends, it seems wise to highlight the following:
(1) the "new normal" prophecy is primarily based on scenarios that are still very influenced by the slow recovery in the aftermath of the 2008 crisis. It therefore tends to linearly project "too much past" into the future.
(2) the "technological disintermediation" prediction does not take into account the possible jobs newly generated by the cybernetic revolution.
(3) the "post-democratic" scenario relies on the actualisation of the other two prophecies, which would shrink the population of the middle class. It looks weak due to the low probability of the other prophecies.
But this issue of whether the mature economies will die or will find a new golden age will be debated in academia and in the media for a long time. The continued debate might, in fact, generate uncertainty and a lack of long-term confidence in the market. Therefore, now seems to be the right moment for "Qualitative Easing", with a confidence-boosting effect similar to the "Quantitative Easing".

(c) 2014 Carlo Pelanda

(c) 1999 Carlo Pelanda
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