Former Reagan budget chief David Stockman has warned that the global markets are dangerously close to collapse and that, were it not for artificial forces, the world economy would suffer a $100 trillion market implosion. Stockman, a former Republican congressman from Michigan and President Ronald Reagan’s director of the Office of Management and Budget, wrote on his blog recently that the world is currently “in the midst of a lunatic financial mania” in which central banks around the globe have addicted national economies to endless printing of money — so much so that any hint of ending “quantitative easing” negatively affects stock markets.
“If you need evidence that we are in the midst of a lunatic financial mania, just consider this summary from a Marketwatch commentator as to why markets are ripping higher this morning,” Stockman wrote. He quotes the commentator: “The dovish comments from both Fed Chairwoman Janet Yellen and People’s Bank of China Governor Zhou Xiaochuan are giving markets a big lift, and in the absence of negative data or news, I imagine this will continue to buoy the markets throughout the session,” Erlam said in emailed comments. Yellen said gradual hikes are likely this year, but that the central bank will move cautiously……. the PBOC governor said he saw “more room” for China to ease policy if the economy stays soft and inflation continues to weaken. MORE