WIEN WEIGHS IN

Byron Wien, the former Wall Street veteran and current adviser to Blackstone, offers every year his list of 10 possible surprises.

According to his recent post about those for 2015, he noted they are less about being correct than about stretching one's thinking or point of view.

Recently we wrote about MSM's churlishness over anyone who questions whether QE European style will work in reviving the EU economy. Laden as it is with Keynesian and quasi-Keysesian apologists, MSM get their panties twisted in a bunch at such matter.

So any attempt to stretch their points of view may be a stretch.

Especially if the one doing the questioning is a known conservative. Now we don't know what Wien's political bent is. That's not the issue. The point is how many of MSM financial scribes parse their criticism deliberately toward those on the right who question monetary policy and its purported effectiveness, American or European style.

The European economy is the focus of the fourth Surprise. European Central Bank chief Mario Draghi has been talking about implementing quantitative easing for some time and now he is finally going to do it. The Surprise is that it has little impact and Europe remains on the brink of recession. There is some precedence for this in the U.S. experience. The Federal Reserve expanded its balance sheet from $1 trillion in 2008 to $4 trillion in 2014 and the increase mainly pushed stock prices higher and kept interest rates low. I estimate only 25% of the quantitative easing found its way into the real economy. The recovery took place as a result of natural, not monetary, forces in the business environment. I believe that the slowdown in Germany, resulting partly from diminished Russian trade, will have an impact on the rest of Europe and that the European stock market will be down in 2015.

In the fifth Surprise, I express similar concern about Japan. Shinzo Abe’s first two arrows, fiscal and monetary stimulus, looked like they were working and the country was showing reasonable growth. Most observers were curious to see the impact of the third arrow, structural reform, on the economy. As last year developed, the increase in the sales tax had a greater negative effect than expected and Japan went into a recession in the third quarter. A slowdown in China and other parts of the world also contributed to the weakness. Abe is determined to get the country back on a growth path and is prepared to step up the stimulus to accomplish this. He will suspend the second sales tax increase, which was scheduled for this year, and implement further measures. The Surprise is that it doesn’t work and Japan remains in recession during 2015. The Nikkei 225, not excessively valued, remains flat, but further weakness in the yen causes it to be down in dollars.

For the umpteenth time we don't have a camel in that race. We just gather the news and determine who we can and who we can't trust to tell the  truth.