As the FT notes this morning:
Wolfgang Schäuble has warned that spiralling levels of global debt and liquidity present a major risk to the world economy, in his parting shot as Germany’s finance minister. In an interview with the FT … said there was a danger of “new bubbles” forming due to the trillions of dollars that central banks have pumped into markets.
It took him a long time to form that conclusion. And if as a result there are bubbles now then the blame can be firmly laid at his door.
If that could be seen in 2010 – and I did see it – the question for Schäuble is why has it taken him quite so long to state what is seemingly obvious when all the conditions for another bust have been laid on his watch?
The lack of knowledge is really quite startling. Schauble and the Bundesbank have always been tyhe loudest voices in the eurozone against QE. Precisely because they didn’t think it would work, it would only create a bubble.
The Sage of Ely is at least nominally a professor in international political economy. Shouldn’t we expect at least a passing knowledge of the scene of international political economy?