2008: Forecasts and prognostications

Written by  //  January 1, 2008  //  Economy, Investment  //  Comments Off on 2008: Forecasts and prognostications

The Laurel Comment

It was ordained at the very beginning that time would be the natural equalizer of all humankind and that it would be at once, both man’s mortal enemy and his greatest savior

If the major economic events of 2007 are to act as a harbinger of those things yet to come about, then it would appear that unlike Ebenezer, it is already too late for the world to change course. The impact of the sub prime mess that was brought about through cheap credit, lax regulation and blatant hucksterism may have been temporarily eased through the facility of the world’s central banks and their out of control printing presses but it is far from resolution.
As was the case during the Reagan-Bush Senior era when the Savings and Loan crisis was spawned, it is the perpetrators rather than the victims who are receiving the bailout. The ongoing actions of the aforementioned central banks to alleviate these short term difficulties are even seen as necessary and unavoidable by many of the issue’s most severe critics as their fear of imminent collapse has superseded their normal reticence toward monetary inflation. The question , it appears has reached beyond the pale, and that the only hope for present and future economic stability lies with “more of the same”. In essence, the easy credit , low rates and printed money that created the crisis in the first place are not being reversed, but enhanced.
Added to the actions of these all powerful government institutions are those of a relatively new and increasingly influential subset of national entities known as the “sovereign funds “. Dubai , (known by some as the world’s money laundering capital), China, Singapore, the OPEC nations and a still growing list of others have spent billions during the past few years buying U.S. based assets, including large positions in major financial institutions barely diminishing their ever mounting reserves of dollars. Hard assets , it would seem are better investments than currency based low yield treasuries, lending thought to the prospect that “ boxing day “ may have ended on December 26th but “ boxing year” in America has only just begun. The country is on sale , not necessarily to the highest bidder , but to any bidder at all. More

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