Private Client Statement Global Market Summary September 2011
The market is disappointed and frustrated by the ineffectiveness of Fed policy and the sluggish response of European policy makers at a time of heightened economic and financial risks. Unfortunately, European authorities are still living in the 1920s Weimar Republic, with a perennial fear of hyper-inflation. They may have forgotten that deflation has already become the key threat to the euro zone. Core inflation in the euro zone is racing down. Under these circumstances, debt-to-GDP ratios will deteriorate further as GDP shrinks.