Here is the situation of economy today and global trend.

-Debt and deficits in the west are so high that domestic consumption will be inevitably low for a real long time and economies trying to escape it through further debt increase ( through the back door ) , will accelerate their collapse.

-Oil demand bound to grow solidly pushed by Asia to press oil price increase at a bigger speed than GDP in western economies.

-Low rates in Europe together with weak euro will cause therefore a strong stangflation specially in mediterranean economies with low added value GDPs needing a strong component of oil and other commodities.

-The fictiously held "strong" dollar will favour high deficits and will make impossible a rapid recovery of big american companies through exports for as long as low current competitiveness persists.

-As debt reduction in Europe , the USA and Japan is not really taken up seriously , the risk of a global collapse will become impossible to deal with.

-Germany in particular and Japan,should compensate lingering low domestic consumption with a real boost in exports but southern european and japanese debt may cause recovery setbacks.

The cycle will continue for as long as present drastic imbalances persist and in the process purchasse power of the emerging eastern economies will approach significatively to purchase power in the west.

Speculation and volatility will be higher than ever unless some sort of control is imposed on carry trades and the percentage of shares subject to free trade for every company in the stock exchange is publicly known and not transgressed.


Published in: on junio 23, 2010 at 10:48 am  Comments (3)