Recession 2.0

With Greece on life support, the US and  Italy downgraded, banks still recovering from a decade-long credit bubble, record unemployment levels and governments slashing spending and extending credit to cope with unsustainable debt, to name a few, we are on the verge of recession 2.0.


The constant bad economic data published everyday is weighing on business and consumer decision-making and hurting the wider economy, creating global stock sell offs. The global economic slowdown continues, markets are more and more volatile, and governments around the world are running out of solutions, the latest one being Operation "Twist" in which the US government is swapping short term bonds with long term ones, thus lowering the cost of money and extending the life of their balance sheet. This is seen as a desperate last move and will not help with any of the main problems the US is facing.

European countries are going down a similar path, even if they have seen the result it had on the US economy. The main difference is that the European union is not one country, its a dozen countries with different fiscal policies, yet  forced to adopt one monetary policy. Which makes the planing and implementation of measures to spur growth even more difficult if not plain impossible in the current environement.

The ECB, IMF and the Fed have sounded the alarm once again, which translates to, help us!!!! Everything we tried so far has failed and we don't know what else to do, hoping that help would come from emerging markets in the form of debt purchase agreements. Which leaves us with where would invest your hard earned money, countries that have created the financial Armageddon or the ones that have survived it. My bet would be on the latter, specially knowing that those emerging markets that have suffered a similar crisis back in the 90s have received and followed the one and only advice western economies gave them, do not bail your failing institutions!!! an advice that obviously worked for the Asian and Scandinavian economies that acted upon it. When put in similar situation western economies didnt practice when they preached, instead they went on a spree of bail outs, and look where it got us all. Now prospect of a better more stable economy for the US or the EU is outlandish, at least for the foreseeable future.

So don't let yourself fooled by main stream forecasts and economic data because, as history tells as recessions don't just come and go it will take months if not years before we could go back to our days of glory. Recession 2.0 is tougher and more costly, specially for the borrowers, the lenders (Emerging markets) on the other hand will have a few bumps along the way while trying to recover some of their money but will eventually come out stronger. 

Market volatility

Markets volatility, a word that has become pretty much an every day word in the media and the streets without as much looking at the underlying reasons for this market volatility. No wait this is what they have been doing.
In fact this is the only thing they did, from the multiple markets crashes and market sell offs to the collapse or near collapse of whole sovereign economies.
Every one is singing a song that would only benefit them in some way or another, from politicians to traders to institutions and here is how: 
The politicians are claiming that the situation manageable yet they still enact laws and measures that would choke their populations for years to come if not decades. Need an example, here is a few, remember how Iceland, USA, Ireland, Greece have downplayed their involvement in sub-prime mortgages , remember how they all reassured their people that their economies will be able to withstand the tremors and would be soon on the "growth" path.  Which of those countries is in growth mode now? NONE. Those politicians, essentially were asking people not to panic and to have faith in the markets, now, they are asking them to take the blow because there is no other choice.
The traders and brokers are a non consenting party in this game (most of them at least). They are the link between the investors and the companies. So you would think that their interests aligns with the investors, because the more money they make for the investors the more commissions they generate for themselves, and you'd be right to some extend, but when you know that those same brokers get paid different commissions on different products you start seeing how biased they may be, when you learn that most of these brokers get their information from internal sources and are encouraged by their employers to sell specific financial products and are rewarded for that, you get an clearer pictures, where your interests become really just an added bonus for them as opposed to it being the main priority.
Last but not least, Institutions (including fund managers, CEOs...). You see them on TV, with their guidance and their forecasts that are really in the end just a way of promoting their company, and getting the world out. but instead of using the traditional marketing tools (ads..) they hide behind an army of analysts that are using different models to essentially say the same thing, "buy us we are the best" and the same time  limiting their brokers as to what they can buy and sell. I'll leave the analysts who get  paid for these report and their bias for another time.
You are probably asking yourself now, so what, we stand no chance everybody is in on it anyway. And you would be right, If you know how the financial system works, you know tha game you are playing, if you don't know the game and the rules that we are playing by you are going to get slaughtered.
Inform yourself and don't take any ones view or speculation for facts because chances are their views are serving their purpose.