Quantitative Easing II: Good or bad?

Take your pick from the respective front pages of The Wall Street Journal and Financial Times today.

The Journal’s headline:

Dow Hits Pre-Crisis Level

Central Bank’s Spending Binge Stokes Global Rally; ‘Don’t Fight the Fed’

The FT’s:

Backlash against Fed’s $600bn easing

As DukeStJournal points out on Twitter:

Really shows respective stocks vs economics focuses.

The FT is smarter here; it has the more-important angle here, though the Journal does briefly mention the alarm bells ringing in foreign capitals.

Think about it: Stocks rise a bit, because, we think (you can never be sure), investors like QE2 (though they weren’t so pumped about it on Wednesday). They’re back at pre-September 2008 levels. Okay.

Or: The Fed says it’s going to print huge amounts of money. Foreign capitals are upset and promise countermeasures.

Even if you’re limiting your audience to the investor (which you shouldn’t do), which story do you think she wants to read: the short-term one or the long-term? A one-off reaction from yesterday or a reaction from yesterday with repercussions—potentially grave ones—well into the future? The FT on that:

China, Brazil and Germany on Thursday criticised the Fed’s action a day earlier, and a string of east Asian central banks said they were preparing measures to defend their economies against large capital inflows.

And the paper places the moves in the context of what it’s been warning about more early and often than other publications: The threat of a currency war where countries retaliate by devaluing in a vicious circle.

On the WSJ side, I suppose you could argue that the stock market is efficient and pricing in the odds of increased economic activity, which is long-term important—but you don’t really want to do that still, do you?

The Journal’s story isn’t as one-dimensional as the headline would suppose. It has this paragraph, for instance:

Despite the market euphoria, some observers expressed doubt that the Fed’s tactics would do much for the economy and could ultimately end quite badly, by creating asset bubbles or fueling runaway inflation.

That would have been a better angle.

(h/t John Gapper)

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.