The blog's friends at the American Chemistry Council used a very relevant quotation recently from Alexander Graham Bell, who invented the telephone and numerous other modern wonders:
"Sometimes we stare so long at a door that is closing that we seek too late the one that is open."
It is a theme taken up recently by Bill Gross, who runs Pimco, the world's largest bond fund. And it is confirmed by this month's IeC Boom/Gloom Index, above:
• The Index itself (blue column) which measures sentiment in financial markets, has been going nowhere since early this year
• Similarly the US S&P 500 Index (red line) has also gone nowhere since April. It was at 1408 at the end of March, and 1412 at the end of October
This probably tells us something tells us very important about the ineffectiveness of the US Federal Reserve's latest QE3 programme of quantitative easing.
It, like its predecessors, is explicitly aimed at increasing asset prices. The idea is that investors will feel wealthier, and will spend more. This will then encourage companies to invest to supply this new demand, causing the economy to rebound.
Nice theory, shame about the lack of results. As Gross points out:
"Surely by now, if the Bernanke model was as advertised, we would be seeing a pickup in investment as a percentage of GDP and a willingness to start saving?"
Instead, capital spending has been falling for the entire 3 years of the Fed's QE programmes. And as Gross concludes:
"Over the past three years, our net national savings rate has been negative, and lower than it has ever been in modern history. The last time this occurred was in the Great Depression.....We are in a "New Normal" world where the negative effects of private sector deleveraging are only being weakly addressed by monetary and fiscal authorities (whilst) ...fiscal policy is in the hands of a plutocracy more concerned about immediate profits as opposed to long-term vitality."
Policy makers remain focused on the door that is closing. Companies need to avert their gaze, and focus instead on the New Normal opportunities that are developing around them.