Sunday, August 21, 2011

The focus moves to Jackson Hole

Since 1978, central bankers, policy experts and academics have annually gathered at the Jackson Hole Economic Policy Symposium to exchange views on emerging issues and trends. Last year at this event, while global markets were under stress, Chairman Bernanke announced the QE2 stimulus plan that triggered a multi-month rally in risk assets such as commodities and equities. Since this past July, markets have significantly pulled back, and global economic dynamics remain unstable. Chairman Bernanke’s presentation at this year’s event will take place on Friday August 26.

MY TAKE: It is unlikely that an encore performance of QE2 will be announced at this event. In today’s environment, there is: 1) increasing distrust of central bankers, 2) less consensus among central bankers on how to address the challenges, 3) confusion within the political leadership of many G-20 nations and 4) a balancing act between deleveraging and insolvency among some global commercial banks. Resolving this global economic mess will likely require significant changes in political leadership and alterations to policy initiatives that will occur over a protracted period of time.

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