Apparently not a single analyst out of the 35 polled by Reuters before the data had expected a negative reading in fact they were expecting the economy to grow by 0.2 %. I mean…. what ? The reality is we have been expecting and forecasting a contraction so as far as we are concerned no surprises there. Absolutely NOT! It’s mostly analysis based on common sense really. One doesn’t have to be a ROCKET Scientist to make that Conclusion especially if you were to look at the scale of damage done to the real economy by the CRISIS. You know sometimes I wonder if one should even bother listening to these big guys who get PAID big BUCKS and become a market GURU if they get it right just ONCE. This is why I keep saying to my friends and colleagues “Do it Yourself ” (DIY)…..at least try it. I mean what’s the worst That Could Happen? We all make mistakes but that’s not the POINT. How many of us have LEARN from it? I am beginning to wonder if we have really LEARNT anything from this CRISIS or may be WE don’t want to LEARN or who cares as long as we can keep making MONEY?
Even though things are GETTING and yes looking better. I still have a lot of questions and some of them still worry me.
Here are some of them:
– Banks (some of them ) are now making money but on the other hand they are still loosing money a lot of money each quarter on commercial real estate, credit card loans, consumer loans among other things. Most of the money banks have made is on their Investment Banking business but not on retail or on traditional banking business. And I am glad some of our analyst friends are beginning to notice that. Although things have gotten better but the PROSPECT isn’t that BRIGHT especially if you consider that we are mostly probably heading into a JOBLESS recovery and a recovery that will mostly likely be slow paced.
– The whole SYSTEM has managed to survive because of the LIFE LINE given to it by various Governments from around the World. The markets have gone up and I believe there are two main reasons for it. First- Because they were so badly beaten up that they could only go up; second – Stimulus package(s) have delivered just look at China, India, Korea, France, Germany and others for example. Although many still doubt that it has but I have no doubt in my mind that it is delivering and this is why we have supported them even though it was not PERFECT. Having said that, we are now seeing a building up of Asset Bubble in the economy (especially evident in China) which needs to be monitored and controlled. My concern is how able and capable the central banks are in making sure the excess don’t build up and CLOG the system again. The other question is do we really know how to price an ASSET correctly or fairly without either over or under PRICING IT? Until and unless we do, we will keep seeing ASSET Bubble Building UP in the SYSTEM. Central banks around the world will have to learn to monitor and supervise asset prices.
– We have still not addressed the SYSTEM RISK ..TOO BIG TO FAIL issue. There has been a lot of TALKS from various corners but no real PLAN.
– The REGULATORS are talking a LOT but DO they really KNOW how to best regulate the MARKET ? They have so far played the BLAME GAME along with Government but do they have what it takes to get things right this time?
– It’s hard to envisage a situation where the WORLD starts growing at the Pre-Crisis levels. So may be the market needs to take a BREATHER?
We have been expecting things to get BETTER in H2 of this 09 so again there are no surprises for us but I believe some of us are getting too or shall I say overly optimistic. Which is not necessarily a bad thing because we do need the AVEARAGE FOLKS on the MAIN STREET to feel confident because CONFIDENCE is KEY to all this. But the PROBLEM with CONFIDENCE is that it can disappear in NO time. So we have to be CAUTIOUS. I must say I am beginning to like TRAFFIC Jams in big cities especially in CITIES like Dubai because it does give me CONFIDENCE that things are looking much better and people are feeling good. And I think it’s important that we look at beyond the numbers and this is why I keep saying to my friends and colleague ALWAYS look at the BIGGER picture and the STORIES behind the numbers. DIG DEEP and not get carried away by listening to the NON STOP sound bites that we get from the MEDIA or the market. I personally get a bit SICK and TIRED of a minute by minute analysis of the MARKET repeated over and over AGAIN on news channels but I do know that I have a CHOICE and I can SWITCH off my TV if I want to. And the reality is we always have a CHOICE (in most cases) so next time when I loose or make MONEY I know it was mostly because of the DECISIONS I made and the options I choose. As someone said markets are run by human ideas and there is no certainty as to how it will react to an action or in action but you always do feel PROUD if you get it right and hope that you have learnt something good from your mistakes if you got it wrong.