Tuesday, November 1, 2011


Here we were tooling along, Dow above 14,000, credit flowing to all that wanted it, housing prices at all time highs, then out of nowhere the bubbles burst. Discretionary spending, the stock market, real estate, and private debt bubbles all popped that all started back in the 80′s. The all too common phrase of “Learning from History” has been the rhetoric amongst governments and central banks for decades. And because we’ve heard this most of our lives we may think that today’s economic events will not have the dire consequences of past mistakes. A bubble is created when an asset temporarily booms. The former (pre-2008) U.S. economy was comprised of bubbles in real estate, personal loans, credit card debt, the stock market, and consumer spending.

Overall, the world economic recovery is very fragile and economic power is rapidly concentrating in just a few nations outside the US; the OPEC oil exporting countries, the European Union, and China. Generally, the country rely more on trade to boost its economic growth and any global slump is likely to affect its economy seriously unlike the U.S that relies on consumer spending. The repercussion in the decreased current account balance is likely to retard the....Read more......

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