To QE, or not to QE, that is the question

So the Fed is winding down QE3 and it has universally been declared a great success. Meanwhile in Japan the BoJ has shocked markets by announcing yet more QE - the world has lost count of how many rounds of QE that makes in Japan. It has clearly not been a great success there.

Why the difference?

I would suggest that the recoveries in the UK and US have much more to do with a swiftly recapitalised banking system then any effect from QE. QE may have helped, but non-zombie banks I would suggest are more crucial. Japan can keep on QEing as much as it wants, but until it sorts out its banks nothing will change. Except maybe the country going bust. 

Plus ca change....

It's been a while but  it's time to restart offering a few thoughts. But where to start? Sometimes it's depressing being right. Anyone who knows me knows that I've been saying for at least 5 years that Europe is Japan writ large. A failure to recapitalise the banks and hope they could muddle through has simply led to stagnation. It's finally coming home to roost.

The U.S. and the U.K. bit the bullet early, took the pain upfront and and are now benefitting from that. Europe has just gone nowhere, hoping that US growth would pull them up with it. It's not going to happen. The recent ECB stress tests seem more realistic than previous efforts but I think the markets are weary of the ECBs efforts to talk things up. They want to see some action. Of course the ECb can promise and threaten lots of things but it is hobbled by its council and the overarching reach of the Bundesbank behind the scenes. Anything that does happen is likely to be smaller in size and slower to arrive than markets hope and the economies need. 

European woes seem set for the long term