Of all times, today is the worst time for the economy. It can all “crash”. Europe is balancing on the edge of huge abyss, strategic bombers B-2 spirit (their price is by the way higher than all rescue fund for Cyprus) are flying over Korean peninsula, Syria is on the edge of the conflict, which can light a detonator in the whole Arabian world, the Chinese estate sector has the parameters by which the American mortgage crisis was only the tiny episode… huge risk, very huge. Of course, that‘s if I want to see it like that. Depending on the point of view, the negative outlook has ten times better chance to spread than the good news. Give the “blood” on the first page to sell better…
The markets are moved by emotions. The panic and crowd cause turbulences. But the total trend is based on something else. On stronger assumptions than the mood of consumers. That is why I tend to look at things without emotions. To cleanse of the debri, which deforms the reality. Sentiment, the grey eminentia of the investment markets… I experienced the bottom, when everybody around was a desperate pessimist and the market suddenly went towards the opposite direction. Then I saw the growth analysis a few days before the fatal break. Sentiment is not a good adviser about the future. Today the mood is on the zero point, it will not be that bad.
We have different assumptions, the planet has changed. We have mainly historic unprecedented potential to solve problems, questions and situations, which in the past overcome our capacities. The demography of the wealth and intellectual potential made a significant leap, which doesn‘t have an analogy in the history. During one generation the world wealth has multiplied, there has never been so many wealthy people as we have at present. At the same time the average life span has prolonged during this generation and thus as the result of this, the amount of educated people has also multiplied compared to the the previous generation.
We have the capacity to solve multiple amount of problems with the much higher complexity. That is why the development is so fast. Previous generations can be viewed as or compared to an elementary school pupil who worries about the simple equation as opposed to solving the scientific problems at MIT. In addition we are on the threshold of the energetic revolution, which the world has experienced perhaps only once. The crude oil has drawn the development actually for a long time, the extent of activities which are concerning with its alternatives is so widespread that the strong transformation of the world economy from the standpoint of energetic needs is probable. The question is whether the domination will be taken over by slate gas which already today changes the energetic paradigms of the biggest world economy or it will be still more available solar energy or other total new alternative. It is a good assumption that there will be lots of energy and therefore the price will be good so there is no doubt that will be a great for the world economy.
So is the glass half-empty? Halffull? In the USA the unemployment has been on a decline for four years, not even one American state is now in double-digit unemployment (Rhode Island with the highest unemployment rate is close under the 10% level), US households have reached the lowest share of instalment of their debt to their income for more than three decades (I would not underestimate this data, these consumers have same economic power as China and Germany together and can start to spend much more than they have up to now). Cash, only cash of the accounts of the American companies has reached the overwhelming amount of 1500
billion USD (what is the amount higher than GDP of Spain and a little lower than GDP of Russia and India) and the profitability of these companies has reached the historic maximums. If we gave greater weight to thi information in our view to the economic situation, what conclusions would we come to?
I wouldn‘t dare call it whether the most growth will be seen by S & P index or DAX. USD can expect to loose its status as well as strengthen the current level. What I would like to put to the forefront of my consideration are the trends in decrease of the world poverty, the change of economic power of the developing markets. In ten years Latin America can be a rich region, Africa does not have to starve and Peking can have more inhabitants than France. Totally new scientific fields and industrial branches will be discovered, which power is hard to foresee (after experience with the internet economy and mobile communication). It is possible that company with the highest market capitalization will be the Indonesian company aimed at nanotechnologies or the global cosmic agency or the conglomerate from China concerning with the geronto-services… The world will change faster than ever. So no securities… but it will be better. Much better.
Analysis produced by pbkon, s.r.o.