Are we Ready to face another Recession ?
Some day or other we need to face the hard truth, the truth that is almost known to many, but just because of the fact that we need to keep the positive vibration in and around the company, locality and in home we hesitate to accept the truth. Yes we are going to face Recession in this year, this recession wont be as bad as the one happened in 2008, but this will give the same impact of what is expected.
Positivity is accepted only to certain extent, truth or being pragmatic is essential to survive. Let me say you one thing, think of this scenario.
If a girl / women / (even men these days.. ) is raped, would you expect her to say that “I was raped” or “I had a surprise sex” ? Being positive doesn’t mean that we need to hide the truth and live in fantasy world cheating / fooling everyone around you.
Political status of US plays a vital role in recession state. The economists call it as THE WINTER DAYS
1. Bush Jr ended with the Great Recession
2. Clinton ended with the dotcom crash
3. Bush Sr ended up with a S&L crisis (Sriya and Libiya)
4. Carter ended with the recession following the Iranian revolution
5. Nixon resigned during the oil crisis and LBJ led into a recession that materialized a few months after he left
The Obama reign has to face the same difficulty The war in the middle east is beyond control. We worried about the people of Gaza few days back then we left it as has nothing to do with our position because we live here are happy eating idly in home.
Siriyan crisis is at stake almost all super powers want to establish their roles in siriya, this all started with something called the ARAB SPRING, this initially started in EGYPT then spread along to Tunisia, the term ARAB SPRING means people agitating against their country and bringing their crown down, as the long promised political and economic freedom were not given for them. It then happened in LIBIYA, finally it reached out to SIRIYA where it didn’t happen as expected ending in the biggest disaster.
US government revenue is sent to the Free Syrian Rebel Army and associated Al-Queida group to fight / protest against the ruling party president Bashar – Al -Assad . while Russia supports the president by providing arms and ammunitions. The middle east nations kuwait, quatar, arabia supports the rebel unit to bring the bashar down, as they are being supported by Iranian Kurdish tribes. So it is a never ending battle.
US should know to Pick the battles. We have to understand that we cannot win all the battles.
Besides politics here are the major factors:
Unemployment: When the unemployment rate hits below 5% it is usually the time to call the heights in the market. This leads to increase in wages and a hit on corporate profits. That will lead to lower investments and the spiral continues.
Global weakness: China used to be the workhorse of the global market for nearly 2 decades and now they are tired. Europe and Japan are lacklustre too. Among the major economies, only India looks a bit bright – but the real estate bubble in some cities refuses to get broken.
Oil crash: Until about $30/bbl, US was not too bothered by the oil crisis. But, it might start hitting now. The benefits of lower pump prices to the consumers is now going to be overtaken by a weak oil industry that is rippling through the US midwest. As the pumps gets closed and the rig makers go kaput, the losses will have a domino effect.
Long cycle: We have had nearly 8 years of expansion and without a major stock crash. Even the bulls are getting fatigued, while the bears are waiting for any opportunity to pull it down. Once the direction reversal goes on, the bulls will start wearing the bear dresses.
Yield curve flattening: There is potentially an yield curve inversion, where the long term interest becomes same or even less than the short term interest rates. Yield curve recession indicator sends warning on US economy