2008 has finally ended, leaving behind a pile of rubble financial and a growing number of corpses: various famous people unable to bear the weight of its economic failure, they chose to do it finished taking his life (the last case is that the former German billionaire Adolf Merckle ).
As the beginning of every year, two things are in order: the good intentions and forecasts for the year just begun.
In 2009, I promise, as well as trying to come alive in 2010, to update the blog more regularly. Recently, I had difficulty in doing so and although it is unrealistic for me to get to write an article a day, 3 per week are perfectly within my reach.
As for the weather however, this will be remembered as the year of terror.
2007 was the year of denial. People like me, who have watched in horror for years, the scientific construction of the current crisis, when in the summer of 2007 saw the two funds at Bear Stearns fail, and banks that had lent them billions, struggling helplessly, unable to resell the CDOs as collateral received, understood immediately it was over. The toy around which the economy had turned half the world for four years and became hopelessly dependent, it was broken.
Central bankers and mainstream economists take a long time before you become fully realize how serious the situation was. We have spent months hearing Bernanke, Paulson and friends, to repeat phrases like "do not worry, the problems are contained", "the subprime crisis non infetterà il resto dell'economia". Peccato che la crisi non riguardasse semplicemente i subprime, ma coinvolgesse l'intero spettro della finanza. I subprime erano solo l'anello più debole e pertanto furono i primi a cedere. Tutto il resto seguì a breve distanza.
Il 2008 è stato l'anno del riconoscimento.
Un periodo durante il quale, perfino gli economisti più ottusamente ottimisti hanno dovuto rassegnarsi, riconoscere che una crisi esisteva e che essa coinvolgeva l'intera economia. Ad inizio 2008 gli analisti ancora vaneggiavano di una probabile ripresa del mercato nella seconda metà dell'anno. Poi arrivò il fallimento della Bear Sterns a smorzare gli entusiasmi e la nazionalizzazione della Fannie Mae and Freddie Mac to freeze up to expectations. The final blow was struck by the bankruptcy of Lehman. On 10 October last year we were literally a few days away from collapse of the entire international financial system.
Terror enveloped the markets. Central bankers and governments intervened gradually coming to be guarantors of the financial system. The hardships of the awards, however, still had to pour on the real economy. The transfer began only a few months, but already the fear is gaining momentum as the manufacturing, public services and enter into suffering.
2009 is the Year of the Gun.
The full impact of the crisis hit the real economy. Large companies will slash investments and fire, while a large number of small and medium-sized businesses fail followed closely by department stores and retail chains. That which at present can be classified as a feeling of fear will turn into a serpentine wave of pure terror that wrap much of the population. Even the usual analysts hoping for a hint of recovery in the second half of the year (as usual) will resign and face facts in front of a background that seems never to arrive.
The 2010 will probably be the year of rabies. A
anger coming out of terror and the feeling dilagherà of helplessness that this year. Depending on how states decide to manage this anger and frustration of the population, the end of 2010 will either offer a glimmer of hope or a single ticket for a chaos whose ultimate consequences at the time, are difficult to predict.
is not the case, however, to go too far with the crystal ball. For now I'll just illustrate what might hold in 2009 with the main actors in the international economic scene, starting from the undisputed leader.
U.S.
Obama has pre announced spending spree in 2009. The level of economic intervention that the newly President will launch soon is pure Keynesian: involves huge costs in infrastructure, investments in the development of renewable energy, economic aid to the states, tax cuts of $ 500 for individuals and $ 1,000 per family. All for the modest sum of 775 billion dollars, with the hope expressed by the new administration to get to create 3 million jobs.
Nobody seems to question the correctness of this line of action. If people are no longer able to borrow to prop up the cabin that face the state, economists say. Almost all anyway. One of the few mainstream economists who openly criticized the strategy of Obama Willem Buiter. Former member of the British central bank, currently professor at the London School of Economics, Buiter in a recent article said that the U.S. can no longer allow certain expenses and that they should go easy on stimulus packages to the sound of funded debt .
Buiter states that the U.S. deficit in 2009 and 2010 will be close to 2 trillion dollars (per year) and says that what may seem like the only solution in the short term, it could have dire consequences in the long term. Along with means a maximum of 5 years, the time limit within which Buiter states that those states that have historically supported the America include the debt, it will give downloading spot dollar-denominated assets on the market.
Buiter describes the line of thought that seems to reign, saying
more than ten years ago, they traveled the same path that the U.S. seems willing to take, without obtaining special benefits. The Japanese government filled the land of elephants, cementing the cement, while at the same time the central bank lowered the interest rate to zero and they threw in measures of quantitative easing. To no avail. The Land of the Rising Sun found itself mired in a decade of deflation is worse to become, within a few years, been one of the creditors for excellence in one of the states with the most elevato rapporto debito/pil al mondo (quasi il 180%).
Un articolo del Wall Street Journal riassume per tappe gli infruttuosi tentativi giapponesi di rimettere in moto un economia dal motore rotto, durante tutti gli anni 90. Chiunque provasse a mostrare agli economisti mainstream il caso giapponese come dimostrazione della natura fallimentare di un certo tipo di interventi si sentirebbe rispondere: "I giapponesi non sono intervenuti tempestivamente e quando finalmente si sono decisi non lo hanno fatto in maniera sufficientemente massiccia". Non fu quindi la medicina ad essere sbagliata, bensì la dose somministrata. Un argomentazione che non mai trovato convincente.
Ciò che salvò il paese del Sol Levante da a fate far worse was the high rate of savings of its citizens, which allowed them to continue to maintain an acceptable level of consumption. The U.S. unfortunately do not have the same luck. American citizens are in their underwear and are required to limit their costs. The emblem of this situation is the car market one of the areas most affected by the drop in consumption.
The video below even if you do not understand English, shows how brutally increased unsold in the automotive industry. There is talk of Mercedes, BMW and Toyota. High-end cars or technologically advanced.
not relying on domestic savings by the state or by private persons and not on a trade balance in surplus to those who will address the U.S. in search of money? The
says Brad Setser in a recent article : the United States to finance their operations should contact the central banks of other countries, particularly the Chinese, Japanese and those of the Gulf States.
you ask where is the novelty.
The novelty lies in the conclusion which Setser after analyzing the trend of capital inflows and outflows from the U.S.. In the chart below you can see that they have an almost identical pattern.
As the beginning of every year, two things are in order: the good intentions and forecasts for the year just begun.
In 2009, I promise, as well as trying to come alive in 2010, to update the blog more regularly. Recently, I had difficulty in doing so and although it is unrealistic for me to get to write an article a day, 3 per week are perfectly within my reach.
As for the weather however, this will be remembered as the year of terror.
2007 was the year of denial. People like me, who have watched in horror for years, the scientific construction of the current crisis, when in the summer of 2007 saw the two funds at Bear Stearns fail, and banks that had lent them billions, struggling helplessly, unable to resell the CDOs as collateral received, understood immediately it was over. The toy around which the economy had turned half the world for four years and became hopelessly dependent, it was broken.
Central bankers and mainstream economists take a long time before you become fully realize how serious the situation was. We have spent months hearing Bernanke, Paulson and friends, to repeat phrases like "do not worry, the problems are contained", "the subprime crisis non infetterà il resto dell'economia". Peccato che la crisi non riguardasse semplicemente i subprime, ma coinvolgesse l'intero spettro della finanza. I subprime erano solo l'anello più debole e pertanto furono i primi a cedere. Tutto il resto seguì a breve distanza.
Il 2008 è stato l'anno del riconoscimento.
Un periodo durante il quale, perfino gli economisti più ottusamente ottimisti hanno dovuto rassegnarsi, riconoscere che una crisi esisteva e che essa coinvolgeva l'intera economia. Ad inizio 2008 gli analisti ancora vaneggiavano di una probabile ripresa del mercato nella seconda metà dell'anno. Poi arrivò il fallimento della Bear Sterns a smorzare gli entusiasmi e la nazionalizzazione della Fannie Mae and Freddie Mac to freeze up to expectations. The final blow was struck by the bankruptcy of Lehman. On 10 October last year we were literally a few days away from collapse of the entire international financial system.
Terror enveloped the markets. Central bankers and governments intervened gradually coming to be guarantors of the financial system. The hardships of the awards, however, still had to pour on the real economy. The transfer began only a few months, but already the fear is gaining momentum as the manufacturing, public services and enter into suffering.
2009 is the Year of the Gun.
The full impact of the crisis hit the real economy. Large companies will slash investments and fire, while a large number of small and medium-sized businesses fail followed closely by department stores and retail chains. That which at present can be classified as a feeling of fear will turn into a serpentine wave of pure terror that wrap much of the population. Even the usual analysts hoping for a hint of recovery in the second half of the year (as usual) will resign and face facts in front of a background that seems never to arrive.
The 2010 will probably be the year of rabies. A
anger coming out of terror and the feeling dilagherà of helplessness that this year. Depending on how states decide to manage this anger and frustration of the population, the end of 2010 will either offer a glimmer of hope or a single ticket for a chaos whose ultimate consequences at the time, are difficult to predict.
is not the case, however, to go too far with the crystal ball. For now I'll just illustrate what might hold in 2009 with the main actors in the international economic scene, starting from the undisputed leader.
U.S.
Obama has pre announced spending spree in 2009. The level of economic intervention that the newly President will launch soon is pure Keynesian: involves huge costs in infrastructure, investments in the development of renewable energy, economic aid to the states, tax cuts of $ 500 for individuals and $ 1,000 per family. All for the modest sum of 775 billion dollars, with the hope expressed by the new administration to get to create 3 million jobs.
Nobody seems to question the correctness of this line of action. If people are no longer able to borrow to prop up the cabin that face the state, economists say. Almost all anyway. One of the few mainstream economists who openly criticized the strategy of Obama Willem Buiter. Former member of the British central bank, currently professor at the London School of Economics, Buiter in a recent article said that the U.S. can no longer allow certain expenses and that they should go easy on stimulus packages to the sound of funded debt .
Buiter states that the U.S. deficit in 2009 and 2010 will be close to 2 trillion dollars (per year) and says that what may seem like the only solution in the short term, it could have dire consequences in the long term. Along with means a maximum of 5 years, the time limit within which Buiter states that those states that have historically supported the America include the debt, it will give downloading spot dollar-denominated assets on the market.
Buiter describes the line of thought that seems to reign, saying
Many bad advice about the policy to be taken arising from lack of understanding of the impact in the short term and long-term events and policy choices. Too often I have heard variations of the following phrase: "The long term is only a short sequence of words, so if we make sure that things have always make sense in the short term, the long term will take care of himself alone." This fallacy, which I wrongly shall label as Keynesian fallacy, it combines three errors.Buiter then rushes to illustrate three errors in question. The first should be obvious. We have no evidence that short-term fix things even the long-term systems. In fact, the opposite is almost certified (if to make things short-term means, "to borrow up to the root hair" in the long term the moment will come when this debt will be repaid with interest). The second error is the inability of existing economic models, which rely on politicians and economists, to accurately predict the future consequences of present actions that might produce. The third problem arises from the fact that many of those who operate and invest in the market do it based on personal assessments about future developments the market. For them, the term is now and who has to decide economic policy should take account of whole countries. The Japanese
more than ten years ago, they traveled the same path that the U.S. seems willing to take, without obtaining special benefits. The Japanese government filled the land of elephants, cementing the cement, while at the same time the central bank lowered the interest rate to zero and they threw in measures of quantitative easing. To no avail. The Land of the Rising Sun found itself mired in a decade of deflation is worse to become, within a few years, been one of the creditors for excellence in one of the states with the most elevato rapporto debito/pil al mondo (quasi il 180%).
Un articolo del Wall Street Journal riassume per tappe gli infruttuosi tentativi giapponesi di rimettere in moto un economia dal motore rotto, durante tutti gli anni 90. Chiunque provasse a mostrare agli economisti mainstream il caso giapponese come dimostrazione della natura fallimentare di un certo tipo di interventi si sentirebbe rispondere: "I giapponesi non sono intervenuti tempestivamente e quando finalmente si sono decisi non lo hanno fatto in maniera sufficientemente massiccia". Non fu quindi la medicina ad essere sbagliata, bensì la dose somministrata. Un argomentazione che non mai trovato convincente.
Ciò che salvò il paese del Sol Levante da a fate far worse was the high rate of savings of its citizens, which allowed them to continue to maintain an acceptable level of consumption. The U.S. unfortunately do not have the same luck. American citizens are in their underwear and are required to limit their costs. The emblem of this situation is the car market one of the areas most affected by the drop in consumption.
The video below even if you do not understand English, shows how brutally increased unsold in the automotive industry. There is talk of Mercedes, BMW and Toyota. High-end cars or technologically advanced.
not relying on domestic savings by the state or by private persons and not on a trade balance in surplus to those who will address the U.S. in search of money? The
says Brad Setser in a recent article : the United States to finance their operations should contact the central banks of other countries, particularly the Chinese, Japanese and those of the Gulf States.
you ask where is the novelty.
The novelty lies in the conclusion which Setser after analyzing the trend of capital inflows and outflows from the U.S.. In the chart below you can see that they have an almost identical pattern.
Setser says:
Setser concludes his analysis (which I recommend reading interamente) dicendo:
In sostanza il finanziamento che le banche centrali del mondo concedono agli USA acquistando buoni del tesoro non sarebbe semplicemente fondamentale. Sarebbe TUTTO.
Questo rende qualsiasi previsione sul futuro imprescindibilmente dipendente da considerazioni di natura politica. Fino a quando Cina, Giappone e stati del Golfo decideranno di continuare a sostenere gli Stati Uniti la baracca starà in piedi. Se anche uno dei maggiori finanziatori del deficit USA dovesse dileguarsi non esisterebbe nessun capitale privato in grado di prenderne il posto.
Giappone e stati del Golfo sono legati con il cordone ombelicale alle sorti degli Stati Uniti e difficilmente cambieranno la propria politica economica. Per la Cina si tratta invece di un matrimonio di puro interesse. Non appena le si dovesse presentare un occasione vantaggiosa per dileguarsi lo farà.
La Cina e gli Stati Uniti, sono i due paesi che reggono in their hands the destiny of the world economy.
The title of an interview Gao Xiqing, a man who manages 200 of the 2000 billion dollars in the hands of the Chinese government sums up the Chinese position: "Be nice with countries that have lent money." Gao said Chinese citizens as they hate the fact that their government invests a huge amount of money in U.S. securities and assets instead of using it internally for the benefit of the population.
Gao says:
I've always been skeptical on the possibility of a second Bretton Woods. To those who invoke such an event seems to me to escape the context in which the agreements Bretton Woods was signed. The Second World War was ending. Europe was a heap of rubble. The old imperial power, Britain, despite not having lost its relevance could not claim any primacy and found himself with una sfera di influenza ridotta all'osso. Gli Stati Uniti invece uscivano dal conflitto come la nuova super potenza, sia dal punto di vista militare che economico. Questo realtà non era in discussione e non era contrattabile, come dimostrò il fatto che tra i due piani presentati a Bretton Woods: quello inglese di Keynes teso ad avvantaggiare le nazioni debitrici e quello di Barry White che avvantaggiava principalmente gli USA, allora il maggiore creditore mondiale, venne "imposto" quest'ultimo.
Oggi è tutto più torbido e confuso. Gli USA non sono ancora ridotti così male da dovere accettare di scendere a patti sottoscrivendo pesanti concessioni, tra cui la più ovvia, sarebbe l'istituzione di un paniere di valute di riferimento world, removing the dollar to its position of privilege. As on the other hand, China can boast that position of unparalleled power in which they found the U.S. in 1944. Although it is the world's largest creditor, is overly dependent on exports at a time when global demand for commodities is resetting.
A second Bretton Woods is credible and can only occur when the major countries of the world will gather with their backs to the wall or following a traumatic event (a world war for example). Now it is still early.
This year, I believe that China will continue to bear the costs of continuous purchase U.S. debt. At the same time will experience alternatives to escape the crisis, such as the creation of an Asian exchange area and will try diplomatically to curb the economic interventions of Obama (as they do not translate into increased demand for Chinese goods).
The U.S. could then finance its deficit in 2009. The economic stimulus package by almost $ 800 billion but will not get the desired results. The U.S. economy will continue to deteriorate. The commercial property market will collapse by replicating the pattern held last year by the residential sector. The latter condition will continue to worsen, will the wave of resets between the option arms (exotic mortgages) leading to the stars monthly installments.
consumption will not recover. The people increase their savings rate and will continue to reduce costs. Even those who could obtain credit after having witnessed the consequences that can lead to over-indebtedness will be very prudent in their financial choices. Continue the process of generational change in the attitude with which people approach the consumption / savings. A change that will stay with us a long time. The operations of the Federal Reserve to inject liquidity into the system will fail miserably. This is because once the problem is not liquidity but insolvency. Default at both the financial system both at the individual level, caused by the weight indebtedness. The Fed is fighting the wrong battle.
We will see a frightening increase in defaults in the market for corporate bonds, while providing very little yield stellar run the risk of buying them. Of the three major American car companies will most likely remain one. The unemployment rate will rise to reach double figures. Increasingly the demands for the creation of trade barriers against major exporting countries and the protests against outsourcing and the relocation of the entry of foreigners in the U.S. with work permits. The U.S. GDP will continue to decline for the entire year.
The bag after a short ride upward during the first months of the year will plummet into the abyss. Supports new indices will be tested and away, away broken. The volatility will reign supreme and will be relied upon by many direct government intervention in support of the scales. At year end, the S & P and the Dow could easily get to claim a 40 to 50% less than the value today. The Hedge Fund will continue to pursue the path of collective suicide by preventing their participants to withdraw the money invested. The funds in December can boast positive results can be counted on the fingers of the hands (even those still in circulation could end up counted on the fingers of one hand).
Several states and cities face bankruptcy. The Center on Budget and Policy Priorities has shown in a report as of 44 U.S. states have serious financing problems. They will close the fiscal year 2009 (ends July 1 of 2009) with a heavy deficit, which will drag defict worsened in 2010-2011, exceeding the $ 350 billion in total. The emblem of this situation is that California in a desperate attempt to reduce its deficit, as well as studying the cutting of various services, forcing state employees to stay home a few days per month (unpaid of course), to think of decrease of 5 school days (to save 1.1 billion dollars) is considering pay tax refunds with the bills .
In the end, as always, the federal government must intervene to save individual states.
care is to what happens in California, because in my humble opinion, what is happening in that state which incidentally is also what contributes most to the U.S. GDP, will give us a vision of the future that awaits Member United in their entirety.
The dollar probably will not collapse in 2009. Despite the dire situation in the U.S., the world is certainly in better health. In recent years the economies of other major countries are all gone tipping the scales in a given sector: who in the export of industrial products such as China and Japan, some in that of raw materials such as Russia and several emerging countries like England and who in the financial sector. All depended on the continuous consumption of U.S. citizens that it was the consumption of goods or credit and all through a terrible year.
On the currency market then, I think the dollar and the yen will stand, while the pound and the euro will decline further.
Ultimately, even if some balance between the different actors in the global economy will be maintained, it will be a precarious balance dictated by fear and uncertainty. A "balance of terror" if that vogliamo dire. Di questo terrore si avvantaggeranno ancora una volta gli Stati Uniti, sebbene anch'essi vadano incontro ad anno terribile.
PS:
Nei prossimi articoli proverò a fare qualche previsione per i paesi del BRIC (Brasile,Russia,India,Cina), per l'Europa e per l'Asia.
Notice how the total of inflows and outflows move together in the chart - apart from the revenues that were attracted by high U.S. interest rates in the eighties and during the late nineties when Foreign investors flocked to buy U.S. stocks. Most of the increase of the total flow reflects an increase in short-term flows and short-term bank flows between different countries, often seem to cancel each other. Or to put it another way, the U.S. deficit was not financed by short-term indebtedness in respect of private banks in the world.
Imagine the process in this way. Suppose a U.S. bank pay a billion dollars to a bank in London and that this in turn lend that money to a hedge fund domiciled in the Caribbean which it then uses to buy a billion in American securities. This chain involves an outflow and an input, but the output has funded the input - it does not help to finance the current account deficit. As a contrast, the purchase by China of Treasury securities (Treasury Bills ed) or Agencies (GSEs titles ed) largely reflect the financial surplus of China - it is not Chinese banks that get into debt with American banks . This certainly helps to finance the U.S. current debt.
Setser concludes his analysis (which I recommend reading interamente) dicendo:
Le banche centrali sono state per tutto il tempo, la principale fonte di finanziamento per il deficit USA. Mettendo da parte il Giappone, le nazioni con grandi surplus finanziari stavano costruendo le proprie riserve ufficiali ed i propri fondi sovrani - ed entrambi sono stati il vettore chiave nel fornire finanziamenti alle nazioni con dei deficit.
E quando la domanda (netta) da parte dei privati per assets USA è crollata essa è stata rimpiazzata da quella delle entità ufficiali (banche centrali ndr).
In sostanza il finanziamento che le banche centrali del mondo concedono agli USA acquistando buoni del tesoro non sarebbe semplicemente fondamentale. Sarebbe TUTTO.
Questo rende qualsiasi previsione sul futuro imprescindibilmente dipendente da considerazioni di natura politica. Fino a quando Cina, Giappone e stati del Golfo decideranno di continuare a sostenere gli Stati Uniti la baracca starà in piedi. Se anche uno dei maggiori finanziatori del deficit USA dovesse dileguarsi non esisterebbe nessun capitale privato in grado di prenderne il posto.
Giappone e stati del Golfo sono legati con il cordone ombelicale alle sorti degli Stati Uniti e difficilmente cambieranno la propria politica economica. Per la Cina si tratta invece di un matrimonio di puro interesse. Non appena le si dovesse presentare un occasione vantaggiosa per dileguarsi lo farà.
La Cina e gli Stati Uniti, sono i due paesi che reggono in their hands the destiny of the world economy.
The title of an interview Gao Xiqing, a man who manages 200 of the 2000 billion dollars in the hands of the Chinese government sums up the Chinese position: "Be nice with countries that have lent money." Gao said Chinese citizens as they hate the fact that their government invests a huge amount of money in U.S. securities and assets instead of using it internally for the benefit of the population.
Gao says:
But I think ultimately, the U.S. government should talk to people and say, "Why do not we gather together and not think about the situation? If China has 2 trillion, Japan has almost 2 trillion, and Russia has different (ed currency reserves), and all the others, then - we throw away the ideological differences and think about what is best for everyone. "We can bring together all the relevant people and think about a system , what people call a second Bretton Woods do what he did the first Bretton Woods.
I've always been skeptical on the possibility of a second Bretton Woods. To those who invoke such an event seems to me to escape the context in which the agreements Bretton Woods was signed. The Second World War was ending. Europe was a heap of rubble. The old imperial power, Britain, despite not having lost its relevance could not claim any primacy and found himself with una sfera di influenza ridotta all'osso. Gli Stati Uniti invece uscivano dal conflitto come la nuova super potenza, sia dal punto di vista militare che economico. Questo realtà non era in discussione e non era contrattabile, come dimostrò il fatto che tra i due piani presentati a Bretton Woods: quello inglese di Keynes teso ad avvantaggiare le nazioni debitrici e quello di Barry White che avvantaggiava principalmente gli USA, allora il maggiore creditore mondiale, venne "imposto" quest'ultimo.
Oggi è tutto più torbido e confuso. Gli USA non sono ancora ridotti così male da dovere accettare di scendere a patti sottoscrivendo pesanti concessioni, tra cui la più ovvia, sarebbe l'istituzione di un paniere di valute di riferimento world, removing the dollar to its position of privilege. As on the other hand, China can boast that position of unparalleled power in which they found the U.S. in 1944. Although it is the world's largest creditor, is overly dependent on exports at a time when global demand for commodities is resetting.
A second Bretton Woods is credible and can only occur when the major countries of the world will gather with their backs to the wall or following a traumatic event (a world war for example). Now it is still early.
This year, I believe that China will continue to bear the costs of continuous purchase U.S. debt. At the same time will experience alternatives to escape the crisis, such as the creation of an Asian exchange area and will try diplomatically to curb the economic interventions of Obama (as they do not translate into increased demand for Chinese goods).
The U.S. could then finance its deficit in 2009. The economic stimulus package by almost $ 800 billion but will not get the desired results. The U.S. economy will continue to deteriorate. The commercial property market will collapse by replicating the pattern held last year by the residential sector. The latter condition will continue to worsen, will the wave of resets between the option arms (exotic mortgages) leading to the stars monthly installments.
consumption will not recover. The people increase their savings rate and will continue to reduce costs. Even those who could obtain credit after having witnessed the consequences that can lead to over-indebtedness will be very prudent in their financial choices. Continue the process of generational change in the attitude with which people approach the consumption / savings. A change that will stay with us a long time. The operations of the Federal Reserve to inject liquidity into the system will fail miserably. This is because once the problem is not liquidity but insolvency. Default at both the financial system both at the individual level, caused by the weight indebtedness. The Fed is fighting the wrong battle.
We will see a frightening increase in defaults in the market for corporate bonds, while providing very little yield stellar run the risk of buying them. Of the three major American car companies will most likely remain one. The unemployment rate will rise to reach double figures. Increasingly the demands for the creation of trade barriers against major exporting countries and the protests against outsourcing and the relocation of the entry of foreigners in the U.S. with work permits. The U.S. GDP will continue to decline for the entire year.
The bag after a short ride upward during the first months of the year will plummet into the abyss. Supports new indices will be tested and away, away broken. The volatility will reign supreme and will be relied upon by many direct government intervention in support of the scales. At year end, the S & P and the Dow could easily get to claim a 40 to 50% less than the value today. The Hedge Fund will continue to pursue the path of collective suicide by preventing their participants to withdraw the money invested. The funds in December can boast positive results can be counted on the fingers of the hands (even those still in circulation could end up counted on the fingers of one hand).
Several states and cities face bankruptcy. The Center on Budget and Policy Priorities has shown in a report as of 44 U.S. states have serious financing problems. They will close the fiscal year 2009 (ends July 1 of 2009) with a heavy deficit, which will drag defict worsened in 2010-2011, exceeding the $ 350 billion in total. The emblem of this situation is that California in a desperate attempt to reduce its deficit, as well as studying the cutting of various services, forcing state employees to stay home a few days per month (unpaid of course), to think of decrease of 5 school days (to save 1.1 billion dollars) is considering pay tax refunds with the bills .
In the end, as always, the federal government must intervene to save individual states.
care is to what happens in California, because in my humble opinion, what is happening in that state which incidentally is also what contributes most to the U.S. GDP, will give us a vision of the future that awaits Member United in their entirety.
The dollar probably will not collapse in 2009. Despite the dire situation in the U.S., the world is certainly in better health. In recent years the economies of other major countries are all gone tipping the scales in a given sector: who in the export of industrial products such as China and Japan, some in that of raw materials such as Russia and several emerging countries like England and who in the financial sector. All depended on the continuous consumption of U.S. citizens that it was the consumption of goods or credit and all through a terrible year.
On the currency market then, I think the dollar and the yen will stand, while the pound and the euro will decline further.
Ultimately, even if some balance between the different actors in the global economy will be maintained, it will be a precarious balance dictated by fear and uncertainty. A "balance of terror" if that vogliamo dire. Di questo terrore si avvantaggeranno ancora una volta gli Stati Uniti, sebbene anch'essi vadano incontro ad anno terribile.
PS:
Nei prossimi articoli proverò a fare qualche previsione per i paesi del BRIC (Brasile,Russia,India,Cina), per l'Europa e per l'Asia.
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