People with an addiction do not have control over what they are doing. Moreover, addictions do not only include physical things such as drugs or alcohol but may include abstract things like gambling or cheap money. Over the past four and a half years, global stock and bond markets splurged on near-zero interest rates and an unprecedented bond-buying programme otherwise known as quantitative easing (QE) by the world's major central banks.
Now we are beginning to see green shoots in the US economic outlook, with Federal Reserve chairman Ben Bernanke putting investors on notice for the first time that QE3 may taper off later this year, conditioned upon continued strengthening in the economy and lower unemployment.
I would have thought this to be fantastic news. The world's largest economy is finally on the mend and the patient getting ready to leave the ICU. Unfortunately, stock markets can be hard to figure out at times but are always worth listening to. June was a particularly tough month for the Stock Exchange of Thailand and the baht. Both suffered heavy declines as foreign investors bailed out from the region in droves at the prospect of a wind-down in QE.
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