Get up at night to talk about the world economy...with a Heinekn in my right hand the night is so beautiful.
I'm a bear on the U.S. economy since the GFC because I feel moral hazard is increasingly an issue in today's world. I saw the post GFC situation was badly handled by policy makers in 2010. Instead of fixing problems for the long term they were too addicted to short term measures. Printing more money to temporarily stimulate demand in an effort to boost domestic consumption and creating more jobs, only wake up to see stimulation money flowing out of the country at an amazing rate each day...Moral hazard is even more ridicurious today than that in the 2007s, not only the US is devaluing their $USD, the EU governments are bailing out insolvant countries in the region using tax payers'money even when the systematic risk is controllable. They hope this will take things under controll but I tell you this won't work in the end as the structual deficit that caused this GFC is still there,like giving blood to an blood cancer patient, it's no longer a liquidity issue post 2010 it's a solvancy issue! Wall Street was smart at the beginning of 2009 to know that GOLD will be KING, why on earth should people trust paper money as each day money in your poket is being diluted?
Today's news: China's central bank has raised interest rates for the third time in four months as authorities ramp up efforts to tackle inflation. China is now in an over-heat state, thanks to the US government, they are smart to bring the world along with them so that every country is busy with its own problems. With persistent inflationary pressures coming from the US, it seems obvious that emerging country such as China to continue on its moneytary tightening cycle until the fire is pulled off. If history is any guide the end result will be a recession by the end of 2012.
Australian dollar is much stronger than I initally expected, and my advisor is claiming another 10% rise in 2011 against the greenback, that's understandable, WallStreet is heaviliy invested in AUD so long as its bet on China/commodites is paying off. But I'm expecting a turning point soon...
