Changing Economy… So What?

During the state of the union address a week ago, president Obama suggested that the economy of the United States is changing. He gave a forecast for economic “growth” as well as claimed job creation and claimed that the democrats pulled the economy out of the recession. Hillary Clinton did not leave any of this behind as she claimed that she was part of the administration that ended the great recession. They are either purposefully disingenuous or completely clueless. It reminds me of a Mark Twain quote, “Sometimes I wonder whether the world is being run by smart people who are putting us on or by imbeciles who really mean it.”

As I wrote earlier this month, the Stock Markets open is the worst in the history of the stock market. As we watch the markets drop our way into the new year, the IMF just released a new forecast where they had to cut global economic forecasts. The earnings in manufacturing is  now reporting that it is the worst earning season since 2009, as we watch the USD appreciate against commodities as well as foreign exchange. This shows that the entire rate hike of only .25%. Mainstream analysts are suggesting that we can maintain a profit recession outside the entire economy. Why would anyone invest in anything if there is a profit recession?

Well, there’s no doubt that we are in a changing economy, we are always in a changing economy. This is because people’s wants, valuations, as well as life goals constantly change. The question is how are we going to combat the downturn in the economy? Obama is assuming that he single-handedly fixed the recession caused by bush, all he did was prolong it. Today, the Chinese GDP report was released and it is the slowest growth in 25 years. Manufacturing is dropping in China, as the people’s bank decides over which stimulus to inject. The Chinese markets reacted to expected stimulus in the future. Yet at the end of the month the Fed will release their quarterly projections, and if it is negative that means the fed will have to admit we are in recession. Chinese exports are dropping  so there is really no point in the Chinese to devalue their currency. When the quarterly is released and the United States starts a stimulus on their currency, the Chinese might appreciate their currency which can lift the downward pressure on consumers in the emerging Asian markets, and re-adjust the Chinese manufacturing to domestic concerns at the expense of the dollar. Also, the Chinese will no longer buy US debt, so the trillions of dollars being soaked up by Chinese government will no longer occur; which suggests that the US economy will have a massive currency bubble pop, and if the Chinese appreciate their currency it will cause a restructure on the foreign markets. The inflationary pressure of the US combated with the appreciated Yuan will cause the Chinese long asked for Basked of currencies. This is a very likely future in the global economy. As Obama said, we are in a changing economy. Meaning, we are no longer the economic power house we used to be, and whether thats a good or bad thing, Obama’s economy definitely helped cause it

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s