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Recession Again ?
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https://www.team-bhp.com/forum/shifting-gears/105647-recession-again.html)
Putin and China are right, they are pulling down the entire world.
Uncle Sam has a policy (please excuse the Hindi) 'Ham to doobenge, tumhe bhi le doobenge sanam'. They have been living way beyond their means for decades, and are not willing to tighten their belts.
Imagine their ratings cut from AAA to even AA though probably they deserve one notch above Greece. The economic edifice will collapse.
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i see it coming in next future. blame it on consumerism and their lavish life style. even more worst is they are not ready to compromise , even on seeing the writing on the wall.
I am moving into Debt and Debt based mutual funds. Lower returns but lots safer. Also, once the interest rates peak the returns will take off. I had seen 14+% in the past.
It is not just debt, but the madness of growth that will do us all in. The mindset of mindless growth that forces the economies to take debt or print and pump money into their markets. Too much money chasing too few goods will push inflation. So the name of the game is increase production - spur growth.
Manmohan Singh government is also guilty of this. There is no way any country can sustain 9% growth. This rate of growth means that the economic activity doubles every 8 years. The issue here is about exponential growth and inability of human mind to comprehend the dangers of compounding growth. In simple terms it means that in next 8 years India will consume more resources than it has consumed since its existence. And in subsequent period of eight years it will need to consume more resources than it consumed previous eight years! This is just not going to happen. It's a false promise - robbing the future generations of the resources that they would need to survive.
This maddening scramble to grow is devouring our natural resource base. The renewables are not able to regenerate fast enough and therefore become non-renewable and non-renewables are getting scarce by the day.
This has led to the specter of peak oil. The new discoveries in past 20 years have not kept pace with production. The OPEC has been revising their declared upwards for the past several years without any new discoveries. This is most suspect.
Sooner than later demand will outstrip supply. It is then then that the oil prices would hit the roof. Rs 250 for a litre is a realistic price within the decade. Impending collapse of US and world economies might be a saviour - if it reduces consumption and depletion of natural resources. I may have give up driving my Yeti. But my chidden will have a chance.
The fuel is used not just for transport. It is only with the helping hand of fossil fuels that we have increased the agri-production by three times - fertilizers, pesticides and irrigation depend on fossil fuel. Reduced oil supplies hit agricultural productivity even more than they hit the transport. Just google "peak-oil" if there are any doubts.
Not only will equity collapse, so will the debt markets. Parking funds in debt as opposed to equity is not very much safe. Gold funds are also in danger. Because ultimately it is only paper being traded, not really supported by adequate physical gold - contrary to the perception created in the mind of people.
There was always talk about 2009 being a double dip recession.
If the US had not raised its debt ceiling of around $ 14.3 trillion, Moody's would've downgraded the shiny AAA+ status of US. This would resulted in markets spiraling downwards.
In turn, countries like China, Japan & EU who are holding large dollar reserves would have decided to dump most of them due to the looming fear of Devaluation and the opportunity to push their own currencies(Especially EU) as Reserve currencies and dethrone the dollar.
Not only the countries, but other financial institutions and Speculators too would've decided to dump the dollars for the same reason sending markets across the globe in a downward spiral.
This is why there was so much furor over increasing the debt ceiling.
Now that the debt ceiling has been increased, the most important clause is spending cuts. This is where the Obama administration will be tested now.
To the American public, as long as spending cuts mean austerity measures on part of the politicos, everything is in order. But as soon as spending cuts start eating into military salaries and benefits, social security payments and other such actions that affect the average American, there is gonna be a huge hue and cry.
So, I believe it is wait & watch as of now. The Obama administration has bought a little more time for themselves by increasing the debt ceiling. But as long as actual debt is not cut down, this storm may soon be looming over the world again..
Yes we are heading into a recession and this time it would be much much bigger. US has been following unhealthy economic practices as the $ (Being an internationally accepted currency) now its coming back and hitting them. I have been an avid reader of "John Mauldin" macro economic outlook and he does predict that the next 10 (maybe even longer) years in US economy will be painful.
Now the cascading effects of US (or even $ as currency taking a beating) will be felt everywhere.
As an investor i would prefer Gold as it follows 20 year cycle and is inverse of $ and goes up higher whenever there is recession. The best investment would be Gold in these times in my view.
When everybody agree's to something it sure wont happen :) as they say in the markets concensus is almost never right. Well dont know about the US but we will surivive, look at us we are a humungous population, read consumption, growth was pegged down and from where 8.7/5 to 8.2, sure there will be pain, IT will bare the brunt but lower oil prices is good for us, lower commodity prices is good, we need prudent financial managers to sail us through, do we have any? are we doing enough ? time will tell. Its actually Diwali today, there is a sale in the markets stock/forex/commodities you can get everything that was there yesterday far cheaper today maybe more cheaper within this month.
Just heard this on the street, some banks like DCB, HSBC are merging departments so pple are expecting job losses. :(
Oh no. Not again.
And our appraisal letters and bonuses are also not declared yet.
And as usual IT guys will be first ones to face the music.
US has been living beyond its means for so long. Its time they tightened their belts.
If the people of U.S have more money than their govt, does it really spell doom for them? Since most of the economy is sustained by consumer spending, bringing down govt spending should not be a huge problem (I hope)
Hope the U.S govt takes over Apple and similar companies :)
Quote:
Originally Posted by sgiitk
(Post 2457042)
I am moving into Debt and Debt based mutual funds. Lower returns but lots safer. Also, once the interest rates peak the returns will take off. I had seen 14+% in the past.
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Interest rates peak? That is optimistic. You and I are old enough to remember Paul Volcker's days. Do you remember them? The yield on 30 yr Treasuries for the US has been under a downward trendline ever since the peak in his days back in 1981. There has been a 30 yr old expansionary cycle at play globally where people have forgotten what tight money actually is. The markets globally are much more open now than then. Cross border impact of developments in any major market will be felt across the board. Expect coupon rates to increase . There will be cycles of up and down but the trend is not going to be towards easing - that I am convinced of.
I would start thinking about the lower rate environment as something which will become a fond memory in the times to come.
Since the Indian stock markets are falling like anything over the past few days, its good for my SIP's which fortunately are happening over the week.
Bad news is Gold is again is zoom away from the reach.
Read in UK papers today Shares worth of 125 billion GBP are wipred out in 5 days. :Frustrati
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