The global economy is weak and getting weaker,
due in large part to the same policies that helped bring the world back
from the brink just a few years ago.
Measures like lowering interest rates and
creating money for central banks to conduct trillions in asset
purchases are "now seen as a sign of weakness rather than strength,"
said Andrew Kenningham, senior global economist at Capital Economics, a
London-based forecasting firm.
That view is gaining validity as easing moves last week in Europe and China as well as the recent measure from the Federal Reserve have had little effect in financial markets.
In
the meantime, optimism already has turned against a supposed deal to
recapitalize European banks, the latest in a long line of plans to
staunch the euro zone debt crisis initially greeted with enthusiasm then quickly discarded as insufficient.
"Hopes
that the EU was finally getting to grips with its crisis and that
monetary stimulus would boost global demand have faded," Kenningham said
in a research note. "With euro break-up risk likely to rise in the
second half of the year and monetary policy looking increasingly
impotent, things could get much worse before they get better."
Consensus is becoming more widespread that central banks are running out of bullets.
Read more: http://www.cnbc.com/id/48121736
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