The world is in a state of shock and disbelief. During the last week, world stock markets have lost more than $4.4 trillion as speculation mounts that the global economy faces a new recession that would deepen US And Europe’s woes.
Greece, Italy and Spain are facing acute debt problem that prompted the European Commission to call for an expansion of the European Financial Stability Facility the 440 billion euro rescue fund. However, Germany, a major economic power in European Union, rejected the expansion of the EFSF. Differences persist among the Europeans on Marshal Plan for Greece.
The United Stated averted a disastrous default by raising the ceiling of debt currently estimated at $14.3 trillion. American capacity to borrow at rock bottom rates is being damaged by perception that its political class is incompetent. It is clear that the President Barak Obama fiscal stimulus has failed to kick start self-sustaining growth and job creation. The powerful US military refuses to cut military budget despite the worst ever financial crisis.
The United States, United Kingdom and Japan are printing money to stimulate the economy. However, the Europeans refuse to follow this policy. In short, the world is witnessing a “currency war.”
A very grim situation is hitting hard the American economy. First, the EFSF deal to soften the bailout terms for Greece, Portugal and Ireland and commit Europe to future fiscal union has only postponed the debt crisis. Second, the US economy is stalling and far away from recovery. Third, the slowing growth in Asia is getting worse than anticipated.
In Australia, the stock exchange rout has wiped $60 billion from the Australian market in one day and fuelled fears of a second global financial crisis.
International crude oil prices fell by $ 5 per barrel against the backdrop of the looming economic crisis and down grade of the US credit rating. It is expected that the oil prices would further decline. OPEC might even evaporate.
The financial turmoil essentially means the failure of the capitalist system. It is a testimony on the breakdown of the economic policies of the US administration. In fact, the Democrats under Obama are responsible for the crisis. This would translate in massive defeat of the Democrats in 2012 elections.
The above highlights are only the beginning of a long and painful global economic depression, which started in 2008. And despite a short respite over the last two years, the depression has never left. It was only delayed by massive amounts of government intervention that went at variance with the very basics of the free market economy.
The intervention only postponed the crisis for a while. Now, the depression is reasserting itself afresh. This depression is very serious, given the huge financial crisis. It will fundamentally reorder the economic, political and social landscape. When it ends, most of the global institutions and markets would be a story of the past. -- Observer Pakistan Aug.7, 2011.
Greece, Italy and Spain are facing acute debt problem that prompted the European Commission to call for an expansion of the European Financial Stability Facility the 440 billion euro rescue fund. However, Germany, a major economic power in European Union, rejected the expansion of the EFSF. Differences persist among the Europeans on Marshal Plan for Greece.
The United Stated averted a disastrous default by raising the ceiling of debt currently estimated at $14.3 trillion. American capacity to borrow at rock bottom rates is being damaged by perception that its political class is incompetent. It is clear that the President Barak Obama fiscal stimulus has failed to kick start self-sustaining growth and job creation. The powerful US military refuses to cut military budget despite the worst ever financial crisis.
The United States, United Kingdom and Japan are printing money to stimulate the economy. However, the Europeans refuse to follow this policy. In short, the world is witnessing a “currency war.”
A very grim situation is hitting hard the American economy. First, the EFSF deal to soften the bailout terms for Greece, Portugal and Ireland and commit Europe to future fiscal union has only postponed the debt crisis. Second, the US economy is stalling and far away from recovery. Third, the slowing growth in Asia is getting worse than anticipated.
In Australia, the stock exchange rout has wiped $60 billion from the Australian market in one day and fuelled fears of a second global financial crisis.
International crude oil prices fell by $ 5 per barrel against the backdrop of the looming economic crisis and down grade of the US credit rating. It is expected that the oil prices would further decline. OPEC might even evaporate.
The financial turmoil essentially means the failure of the capitalist system. It is a testimony on the breakdown of the economic policies of the US administration. In fact, the Democrats under Obama are responsible for the crisis. This would translate in massive defeat of the Democrats in 2012 elections.
The above highlights are only the beginning of a long and painful global economic depression, which started in 2008. And despite a short respite over the last two years, the depression has never left. It was only delayed by massive amounts of government intervention that went at variance with the very basics of the free market economy.
The intervention only postponed the crisis for a while. Now, the depression is reasserting itself afresh. This depression is very serious, given the huge financial crisis. It will fundamentally reorder the economic, political and social landscape. When it ends, most of the global institutions and markets would be a story of the past. -- Observer Pakistan Aug.7, 2011.
The Trend
The stockmarkets, all of them, ended the week as bear markets that could last a long time. I still believe in the targets I have set out in this third wave down. A correction, short or long always come so do not believe in a sudden bottom. Remember that the big players now are short and the even bigger players at some point will trigger a rally that could be fast and high. Do not buy any shares only sell the ones you still own. Traders should follow the rally carefully and go short on the top. I hope to guide you through the rest of this bear market.
Gold and CHF are currently bullish but a few signs point to a reversal or correction. This will be followed up in this blog as well.
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