Dr Doom says QE3 will barely help

Despite the fact that Dr. Doom hasn’t been the most accurate predictor of the equity market rallies, one still always has to look at the markets from both a bull and a bear perspective.

Consider, first, that the previous QE rounds came at times of much lower equity valuations and earnings

Moreover, fiscal support is absent this time: QE1 and QE2 helped to prevent a deeper recession and avoid a double dip, respectively, because each was associated with a significant fiscal stimulus.

In short, QE3 reduces the tail risk of an outright economic contraction, but is unlikely to lead to a sustained recovery in an economy that is still enduring a painful deleveraging process

Source: The Mint

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