USA - another Japan ? Double-dip recession possible ?
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  • Not just possible ... already happening ...

    Back in 2009 I had mentioned - in the face of significant ridicule - that history has always proven that Govts (and in this case US) have overestimated their own ability to reflate economies going into deflationary depression and underestimated their own ability to force themselves into the same. Meaning, that the main culprit acting to guide the US into depression is the US Govt itself and its actions via the FED.

    Mainly 2 reasons for it.

    1. Listening to the wrong advice simply because it is more politically expedient

    2. Putting votes before good sense.

    As many indicators are starting to show, the US never went out of recession, the so-called "growth" was entirely due to the pumping up action of the stimulus, without which they would be in much greater sh** than they are in now and when the stimulus ends the US will find that not only have they pushed the problem a little down the road, they have also made the depression more severe than it would have been if they had not further weakened the structure by refusing to punish the criminals who started it all (thus making them even bolder) but they have also borrowed more and pumped the money into all the wrong channels.

    There is one way the US may not end up as Japan. While Japan continued to avoid seeing the problem and got into a trap so deep that they are forced to extend and pretend for decades, I believe that sometime in the next few years, someone in the US will have the guts to correct this imbalance, create a shortened (not short!) but severe depression and bring back the economy on track.

    Whichever way, the pain will be considerable and widespread. And how do you think it will affect the rest of the world?

    cheers
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  • I concur with Wiseman. Please read the latest in Economic Times http://economictimes.indiatimes.com/Fears-of-second-recession-in-US-loom/articleshow/6240341.cms and also a series of articles by Paul Krugman (who famously predicted the housing bust and cascading economic collapse when the so called experts like "Chuck Prince" of Citi said they were dancing in subprime) in The Hindu.
    The real worry now will be of deflation of industrial commodity and inflation of food and related commodity(say fuel) which will make the situation a double whammy.
    Hope a Japanese situation is not repeated in the US.
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  • Originally Posted by wiseman
    Back in 2009 I had mentioned - in the face of significant ridicule - that history has always proven that Govts (and in this case US) have overestimated their own ability to reflate economies going into deflationary depression and underestimated their own ability to force themselves into the same. Meaning, that the main culprit acting to guide the US into depression is the US Govt itself and its actions via the FED.

    Mainly 2 reasons for it.

    1. Listening to the wrong advice simply because it is more politically expedient

    2. Putting votes before good sense.

    As many indicators are starting to show, the US never went out of recession, the so-called "growth" was entirely due to the pumping up action of the stimulus, without which they would be in much greater sh** than they are in now and when the stimulus ends the US will find that not only have they pushed the problem a little down the road, they have also made the depression more severe than it would have been if they had not further weakened the structure by refusing to punish the criminals who started it all (thus making them even bolder) but they have also borrowed more and pumped the money into all the wrong channels.

    There is one way the US may not end up as Japan. While Japan continued to avoid seeing the problem and got into a trap so deep that they are forced to extend and pretend for decades, I believe that sometime in the next few years, someone in the US will have the guts to correct this imbalance, create a shortened (not short!) but severe depression and bring back the economy on track.

    Whichever way, the pain will be considerable and widespread. And how do you think it will affect the rest of the world?

    cheers




    USA - GDP $ 14.25 trillion (Export - $ 1 Trillion, Import - $ 1.5 Trillion)

    GDP - composition by sector:

    agriculture: 1.2%
    industry: 21.9%
    services: 76.9%

    Per capita - $46,400

    Budget:

    revenues: $2.104 trillion
    expenditures: $3.52 trillion


    Majority of India's export (Textile, S/w service, , Jewels and Gems etc) are going to USA and other western countries.

    The growth what we are seeing in India is due to export oriented services and domestic consumer needs (automobils, accessories, FMCG etc).

    If the export service lags then there wont be any job.. and no consumer spending :( no growth :(

    Agri growth - 2 %. (11th plan expectation 4 %).

    Due to budget deficit.. We are not seeing any Infra development (it was shouted everywhere in the year 2007) :)


    GDP - composition by sector:

    agriculture: 17%
    industry: 28.2%
    services: 54.9%

    Per capita - $3,100

    Budget:

    revenues: $129.8 billion
    expenditures: $214.6 billion

    ---------------------------------------------------

    Monday - ABC data

    Tuesday - US Home sales data

    Wednesday - XYZ data

    Thursday - US Jobless data, India Inflation data

    Friday - Tired of reading the above :)

    And India has to compete with Bangladesh, Sri Lanka, Pakistan etc for low cost Textile and other goods.
    CommentQuote
  • Tired so early?

    Originally Posted by Siddhu
    USA - GDP $ 14.25 trillion (Export - $ 1 Trillion, Import - $ 1.5 Trillion)

    GDP - composition by sector:

    agriculture: 1.2%
    industry: 21.9%
    services: 76.9%

    Per capita - $46,400

    Budget:

    revenues: $2.104 trillion
    expenditures: $3.52 trillion


    Majority of India's export (Textile, S/w service, , Jewels and Gems etc) are going to USA and other western countries.

    The growth what we are seeing in India is due to export oriented services and domestic consumer needs (automobils, accessories, FMCG etc).

    If the export service lags then there wont be any job.. and no consumer spending :( no growth :(

    Agri growth - 2 %. (11th plan expectation 4 %).

    Due to budget deficit.. We are not seeing any Infra development (it was shouted everywhere in the year 2007) :)


    GDP - composition by sector:

    agriculture: 17%
    industry: 28.2%
    services: 54.9%

    Per capita - $3,100

    Budget:

    revenues: $129.8 billion
    expenditures: $214.6 billion

    ---------------------------------------------------

    Monday - ABC data

    Tuesday - US Home sales data

    Wednesday - XYZ data

    Thursday - US Jobless data, India Inflation data

    Friday - Tired of reading the above :)

    And India has to compete with Bangladesh, Sri Lanka, Pakistan etc for low cost Textile and other goods.


    Siddu,

    If you think this is too much, let me give you some 2 dozen sites with some really heavy stuff for starters. Will keep you going over the weekend! :D

    Okay, the thing is, you need to first be hungry to learn just for the sake of learning. Second, you need to pace yourself out and not do everything in 1 week. Third, after reading everything, take time to reflect on it, put it into your own mental framework so that it expands your frame a little bit more.

    Then, once in a while you will see a real-world scenario where this learning will come in use and only then will you see the value of all that reading and learning.

    Till then, close the Net and catch some sleep. Meanwhile, let me go over all the data you missed while you slept and give you a summary on Monday! :)

    cheers
    CommentQuote
  • Originally Posted by Siddhu

    ---------------------------------------------------

    Monday - ABC data

    Tuesday - US Home sales data

    Wednesday - XYZ data

    Thursday - US Jobless data, India Inflation data

    Friday - Tired of reading the above :)


    Lol Siddhu. cudnt agree more. there are a few more like "Consumer confidence dips to the lowest since xyz" (i think this comes every friday)
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  • Originally Posted by kaatesha
    Lol Siddhu. cudnt agree more. there are a few more like "Consumer confidence dips to the lowest since xyz" (i think this comes every friday)



    reading all the analysis is fine ....beware when sometimes
    the analysts with all the advance mathematical calculations come up with '2+2=5' -even if we cannot follow the advance mathematics we have the right to rubbish them...
    CommentQuote
  • Originally Posted by kaatesha
    Lol Siddhu. cudnt agree more. there are a few more like "Consumer confidence dips to the lowest since xyz" (i think this comes every friday)


    Yes, Somewhere in Texas, Mark bought a towel and soap this week....

    So the Consumer confidence increasing in USA.


    And Phill got a Motor car ride to his North Carolina college.

    So crude price will increase next week !!!!!!!
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  • The slowdown in US/Europe is given so assume that people are risk averse for the next 5 years in these countries. They will by less goods thereby the supplies in chinese/asian economies will suffer. less goods equals less profits for these corporations, more cuts in labor force, reduced benefits for employees. the math is simple. Western european slowdown will affect Asian labor and subsequently Asian salaries.

    Assuming each of the IT employees takes a reduction in pay of 20% over the next 5 years, these costs will be passed on to the companies in India and their customers abroad.

    Indian deficits will increase as there is reduced inflows. FII's will flee the market thereby weakening the rupee. Import prices will go up as the rupee is weaker. Oil prices in rupee terms will rise and with the degregulation in oil, will be passed to consumers. diesel will go up 20%. Everything affected by diesel will be up and this means everything including all construction material, thereby builders will raise prices citing shortage and high cost of material. India is not the reserve currency so everything priced in rupees will more expensive.

    Apt prices will will rise to combat inflation. Those investors who want to sell will sell and exit at lower prices. Builders will not launch new projects so supply will be constrained.
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