Bankruptcies, collapses, loss, death, fraud. Housing bust. Liquidity Crisis. Credit crunch. Commodities prices bubble in the first half and bust in the second. This is how we will remember 2008.
What will await us in 2009?: Continuation of this year’s tendences, stagnation, or a swift recovery? The stock market is trending sideways since October 20 and refuses to go any lower. Bonds see unusual demand due to investors requesting their advisers to get out of stocks and into bonds. Corporate bonds are deemed to risky for investment. The Fed is taking care of this by dropping the interest rate to make it meaningless to invest in treasuries. Soon all this money will be pushed out of treasuries into corporate bonds and equities.
The problem remaining: toxic assets on the ballance sheets of the banks. Because of them, banks refuse loan. The Treasury is addressing it with TARP. The economy gave a little bit of slack? Unemployment figures start to worry us? Obama’s infrastructure spending program will take care of it. Every aspect of crisis is taken care of and I am positive that in 2009 we will see the early sings of recovery and with oil and commodities prices at record low, the economy will gain speed quicker than in other recessions.
What will fuel recovery and growth?: Zero interest rates and inflationary Fed policy. It is just a matter of time when the gears of economy get back to full speed. Demand for oil and commodities will rise again and we will back to speed by the fall ‘2009.
Everything is going to be alright.
Merry Christmass and a Happy New Year!