Playing Global Financial Chicken
Every day the media from magazines, newspapers, radio to TV present two groups of pundits who are playing global financial chicken. One group argues economic recovery is underway and financial markets are responding early and strongly and most importantly will continue to do so. Jim Cramer even goes so far to decry that we are in a “Superboom.” The other group argues there will be a correction most likely a large one meaning over 10% decline on the major averages.
Financial markets are going up, and yes, only up. Here’s why: If the economy recovers companies will make money and they have gotten lean over recent years so they will have huge earnings driving equity markets way up. If economies do not recover, governments across the planet have committed themselves to spending and creating liquidity. Thus, regardless of economic conditions financial markets will ONLY GO UP.
The result: 3-4 years from now we will most likely have to pay the price of all today’s profligate spending and liquidity creating. Like a group of drunken sailors we will wake up to huge hangovers and be terribly sick and unfortunately for a much longer period than most sailors take to recover.
8 Responses to “Playing Global Financial Chicken”
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Allan Austin is a business and strategic development executive consultant. His latest challenge is making social media mainstream. The physicist, Neils Bohr said, “A mind stretched to new dimensions never snaps back.” Allan stretches minds. Read more...
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