The first session this morning was about economic conditions. Three of the four were excellent. But the first presentation by Paul McCullin was bizarre, and horrid.
According to McCullin, we went into a liquidity trap in 2007. I know lots of economists who would deny that (including me). He then made the impossible assertion that the Fed policies bailed us out of the liquidity trap. Huh? Monetary easing won't work if we're in a liquidty trap, so either we weren't in a liquidity trap or quantitative easing didn't work. The guy has a great presence, but I was disappointed.
The next three presentations had massive information overload. Julian Callow (Barclays) was superb. He presented numerous charts to show that while the private sector in the US has been deleveraging, the public sector hasn't. His main concern, however, was the high unemployment rate in southern Europe, and doesn't really see an easy way for those countries to grow fast enough to deal with that problem, especially given their debts, their aging populations, and their very unfavourable investment climates.
Catherine Mann (Brandeis) presented material showing that quantitative easing in the US has led to big swings in short AND long term financial capital flows into emerging markets. So long as it leads to foreign direct investment, that's not so much of an issue, but it puts a strain on the developing economies otherwise, and much of the movement from the Fed's 2nd futile attempt at "operation twist" was what she termed "hot money" -- very short term flows.
Those three were followed by a brief presentation by Kozo Koide (DIAM) who presented tonnes of data about the Japanese economy. Big points: the credit multiplier has shrunk dramatically, meaning that the big increases in the monetary base have been more than offset by a drop in velocity. He concluded with some indications that inflationary expectations have turned upward and are moving up toward zero.
My attendance at the summit is supported by several sponsors, including the Department of Economics at The University of Regina.