Last chance?

From the WSJ:

NEW YORK—Speculation that U.S. central bankers are set to unveil additional stimulus measures lifted the Standard & Poor’s 500-stock index for the fourth session in a row, as tensions eased across Europe’s financial markets.

Speculation that U.S. central bankers are set to unveil additional stimulus measures put the Dow industrials on course for another triple-digit gain. Tomi Kilgore has details on The News Hub. Photo: AP.

The S&P 500 rose 13.20 points, or 1%, to 1357.98 on Tuesday, giving the benchmark its longest winning streak since May.

Unfortunately, there´s a limit to the number of times you cry ‘wolf’ and someone (the markets) comes out to help!

Scott Sumner sums it well:

The Fed has adopted an extremely reckless and risky policy.  But here’s the great irony; 99% of economists think that solving the problem, going back to faster NGDP growth, would be a risky decision for the Fed.   “Oh dear  . . . they might have to buy so much stuff.”   It’s all about fear of the unknown.  I’m here to tell you that 5% NGDP growth is the known.  What we have today is the unknown.  This applies doubly to Europe.  Remember those who said the euro would bring ‘stability,” that it would eliminate the instability of exchange rate fluctuations?

Update: This post from VoxEu has a different take, but the end result is the same. They think the economy is like Rocky Balboa:

Every Sylvester Stallone fan knows that Rocky Balboa never gives up, or rather: “it ain’t about how hard ya hit. It’s about how hard you can get it and keep moving forward.” (Stallone 2006). However many times Rocky gets hit, he keeps on coming. Even after Apollo Creed floors him with a vicious hammer punch, Rocky jumps up for more punishment.

We fear the US recovery, like Rocky, will be down on canvas again, pummelled by another round of policy uncertainty. If that happens, will the US economy spring back again, like Rocky? Perhaps, but even the most resilient fighters suffer long-term damage from repeated heavy blows.