Tuesday, June 7, 2011

Things will get uglier

It will get uglier for sure; that is the world economy, of course. The first leg of this greater depression started in 2008 and the consequences was dire, however, there has been the appearance of a recovery, which, indeed, is more of an illusion. The real numbers are no better than they were in 2008, even though the nominal numbers may reflect differently. There will be a second leg which will be uglier, because it is common sense that what took 28 years to build up cannot be undone in two or five years. If one figures that this depression started in 2008, then it is only 3 years old, therefore it still has a long time to go yet; when it ends still cannot be accurately forecasted except for the fact that this decade will be a lost decade for a large amount of people in the USA and some other parts of the world

The second leg could start either in the Q3 2011 or Q1 2012, or it can happen anytime within the next 5 years, however, the balance of the world economy right now is very precarious with a 54 percent possibility that things will get worse as of today. If there is one more disaster the size of what took place in Japan recently, then that will trigger it in a hurry. However, if there is no disaster of that magnitude but there are smaller ones coupled with any downturn of European economies on the brink along with any of China, India, Russia or Brazil that that will send the world economy over the edge.

The Global economic health Index. The higher the Index the worse the Global economy:




My advice, even more so now is, live below your means and hang tight, be good to your fellow living beings. For those with the courage, intelligence and knowledge there will still be money to be made in the stock market but wall street is not main street so look out for people and fight against any forms of socialism or communism.

There may be some politicians who will try to socialize the economy, but most of them will more than ever be dishing out more corporate welfare, this should make me happy because I am an investor, however, that leaves the majority footing the bill which is highly unethical. We must guard against politicians and special interest groups using this as an opportunity to eradicate decades of freedom that many fought for. Also, we must not let trade unions and social groups drive the USA or Canada into communist or socialist states. That being said we need both sides, the extreme capitalists and the diehard socialists to ensure that we meet somewhere in the middle.

Even though capitalism is not perfect it is still the best system as long as it has not gone mad and worth defending even though right now it looks like it may have failed because of a few mad men.