Beware removal of stimulus

As investors, we all look back with 20-20 vision at the excesses of the TMT bubble, incredulous we could have allowed valuations to get so far adrift of economic reality.

A mere handful of years later, we allowed the banks to dance to the tune they themselves composed, while their balance sheets collapsed under the strain. The ‘Celtic Tiger' that was once Ireland is now whimpering under the weight of its ludicrous debt burden, and whole areas lie like mausoleums to easy credit, yet we watch on the sidelines as China builds ghost towns. In August 2010, Ben Bernanke set QE2 into motion. Since then, he has justified this measure by pointing to the resurgence of the US equity market. Having weakened during the summer, as investors in the West feared the...