BBH - Economic growth may not return

We just picked up this article by Marc Chandler of Brown Brothers Harriman on  "Seeking Alpha" . We don't agree with all his premises but we do agree that there is a lot of wood to chop before the global economy gets back on track and before the imbalances that exist are worked through.

With Scottish ancestors we've never really bought into the idea that having too much saving, or what is now called "surplus capital" was a bad thing. Economically we get it but the reason it is a problem is that the world is beset with what Hyman Minsky would call "money manager capitalism". It is the flow of this money from one jurisdiction to another and across markets which is so distorting the usual signals one gets from underlying growth. When markets are driven not by the supply and demand for goods but the supply and demand for money then we get an unstable economy. Chandler says:

"Surplus capital lies at the heart of the so-called currency wars. Currency devaluations are not so much about beggar-thy-neighbor moves in order to boost exports. They are more about trying to minimize or neutralize capital flows which are pouring into a dozen or so emerging markets which can hardly absorb their own savings, let alone a chunk of the savings from the US, Europe and Japan...These large capital inflows could fuel a bubble in local asset prices, distort pricing signals, complicate policy, and pose a serious risk when the flows go into reverse"

Minsky is, as ever, prescient.

Chandler, whose views we have always respected, has an interesting take on the current situation and the history of it and even though we think he is letting policy makers off far too lightly in the above quote given we believe they are actively looking to beggar thy neigh its worth a look.

Lets say we agree with the conclusion if not all the content

 http://seekingalpha.com/article/230247-the-broken-cash-register-why-economic-prosperity-might-not-return