The Greenspan Fed was often held out as the peak in Central bank popularity. At the apex of the credit super-cycle, its easy to be well liked. Today, Central Banks around the globe are creating unimagined amounts of monetary pornography to deal with the post apocalyptic landscape. CB popularity has gone into a tailspin.
US Presidential candidates unite on Fed bashing and the Chairman's removal upon election. Anti-Fed rants from the bully pulpit are met with rousing audience applause. Easy money that puts the froth on personal wealth is cheered. The ugliness needed to mop up the disaster is vilified.
Our analysis of recent ECB actions and Fed statements is that CBs are exhibiting an extreme distrust of markets. Thus, policy is directed at averting the natural order of prices, choosing winners and nominal-izing results. Amazingly, the universal Litmus test for judging this activist approach is the "market's reaction." The flaw is obvious. If markets cannot be trusted to discover price equilibrium, then how can a contrived (some would say manipulated) result be viewed as relevant feedback ? "Priced for perfection" is not a term of endearment.
The ECB finds itself in the worst position. Only market devastation brought officials to the table for serious discussion. Central Bank activity - near term successful - has only served to prolong a meaningful solution. The Fed has gone on a publicity tour but, like Lindsey Lohan, more time in the spotlight cannot repair the damage of over exposure. Shut up, go away and we'll remember you for The Parent Trap.
I don't know how or when the Bubble in Global Central banking ends. That's the trouble with bubbles. But do yourself a favor and look at the balance sheets of the FED, ECB, BOJ, BOE ,SNB and PBOC. (Jim Bianco can help you out, or the info is readily available). This does not end well.