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Monday, December 31, 2007

Geopolitical Crises that can trigger Economic Booms and Declines

It's an accepted notion, an accepted fact that Economical Growth and Decline are to a large degree governed by Geopolitical Crises and Maneuvering.

Let's look at the coming year of 2008. What have we here, folks ?

The Crisis in the Middle East is not waning. In fact, certain events are leading to greater instability - events like the global tension in Iran, the Benazir Bhutto assassination, the desperation of the Bush Administration since 2008 is election year.

Add to that a growing understanding amongst the OPEC countries.

Add the factor of high ESCALATION OF GASOLINE DEMAND IN DEVELOPING COUNTRIES.

END -RESULT :
Oil Prices will skyrocket.

So, this will trigger inflation.......this inflation will hit most countries DEPENDENT on oil the most.

What about the leading economy ? The U.S. economy ? It is heavily into debt....and add to that the burden of War.

IMHO, we will see a further DECLINE in the U.S. $ against the Euro and all the developing countries' currencies. Furthermore, this decline is also due to an "artificial mass psychology" effect. If Gurus like George Soros , Gates and Warren Buffet openly state that they are dumping the U.S. $....won't it's value go down ?

The European Union is a HUGE ECONOMIC ENTITY......it's GDP is 1.5 to 2 times that of the U.S.
......It's a not much known fact. This will start to call the shots slowly in the global trading strategies. However, IMHO, it's still unclear HOW WELL THE European markets will perform.

Focus now the Asian economies like China, India & the Pacific Rim Countries. These, in the abscence of conflict, and taking advantage of the selling of their products at a cheaper price...However, I think China will start to face a GROWING CRISIS because it's economy is TOO CONTROLLED.....
.....However the rest of the Asian Economies WILL CONTINUE THEIR ECONOMIC BOOM.....though a bit chaotic.

So, best picks for the GLOBAL TRADER are certain MARKET SEGMENTS that will PROFIT within the DEVELOPING COUNTRIES' ECONOMY.

The best segments are obviously INFRASTRUCTURE -ORIENTED ......like Steel, Cement, etcetera. Almost all companies in this sector should outperform the basic market indices.
Outsourcing will lead to boom in the I.T. sector....however one has to do thorough research. Not all companies will fare well.
Export at cheaper prices will benefit the consumer goods and pharmaceutical sector also.

Wednesday, December 19, 2007

Global Economy Indicators....is it a war economy ??

It might be a bit early to say that it's a total war economy, where gold, silver prices are rising.

But then there are other indicators too:

The developed countries' stock markets are not giving good returns.....investors there are turning more and more to investing in emerging markets.

Now, check out the following graph:



Study the graph above......graph source: stockcharts.com

Note, the steady fall of the U.S. $ (red line)...it begins to fall post 9/11 .....of course, there's a buffer time period, the fall starts from 2002 end of first quarter.

Check out the rise of silver prices (blue) , it starts rising from about start of 2002....

It's exactly inverse proportional !

And that trend is continuing till as of today.

Now, wouldn't you say it's a global war economy ?...........

God knows
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