The article about the stock market everybody should read

[admin]

Thanks. I see from that graph of M2 and GDP that both are rising but the M2 rise has been consistent for a decade. Also, with the exception of the recession's GDP stepdown, the two have run in parallel. Overall, the author certainly makes an excellent case for continued investment in equities absent something big like a complete European collapse. On that matter my rose colored glasses tell me the Europeans have learned...or are quickly learning...austerity and tight money is the problem and not the solution. That in turn suggests Europe is getting ready to turn the corner and get back to growth...a good thing for American equities in the near future at least. Japan evidently has already done so. Recent rise recoveries in my couple of building stocks suggest the market may also be happy with this thesis.

I wish I could be more optimistic about the eurozone, Art, but I'm afraid I can't. Long ago I argued that the eurozone periphery faced a Catch-22 situation:

• Embark on inflationary policies and get growth and inflation up, but worsen competitiveness
• Embark on deflationary policies (which is what they've done) to improve competitiveness ('internal devaluation' but increase the real burden of outstanding debt.

There isn't yet anything that occurs to me as that this awkward situation has lessened in any meaningful way. Yes, competitiveness has improved somewhat in the periphery, but as a result of these deflationary policies, read debt burdens are a lot higher as nominal GDP has imploded.