Sunder’s List: Understanding QE

Roundup: US markets closed. London +0.11%, Germany -0.28%, France -0.11%, Gold $1252.30. At pixel: Nikkei +1.48%, Hang Seng +0.49%

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Can markets keep company boards honest? Investor unhappiness with expensive overseas purchases is nothing new and it should act as a welcome brake on the ambitions of empire builders in many board rooms. The question, however, is what will India Inc do now in response to intense market scepticism and concern over expensive valuations and debt-fuelled acquisition binges. (ET)

Dismantling an existing factory in Tiruppur and moving it to Oman, despite Oman’s high labour costs, makes sense given the sheer ease of doing business there: How they killed our factories

Before the UPA came to power in 2004, tax assesses were growing on average at 16% – but between 2004-05 and 2011-12, they were growing at just under 2.5%. In terms of this metric of tax performance, the UPA government was 10 times (or nearly 1,000 per cent!) worse than the previous government in increasing taxpayer participation. (BS)

Number of PE investors shrinks by more than 20% in last 2 years: Tough economic environment and a lack of adequate returns force some to rethink their India investment strategy. (LiveMint)

QE only “works” to the extent that zero-interest liquidity is treated as an undesirable “hot potato,” forcing investors to seek yield by chasing increasingly speculative assets. Having achieved that end, easy money will do nothing to support stock prices in situations where investors actually find short-term liquidity desirable, or approach speculative assets with the slightest amount of risk-aversion. aka, pushing on a string. (Hussman)

Good luck!

 

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