Wednesday, June 17, 2009

Still Questions about the Global Recovery

After a recent rally on the global stock markets, we have seen 3 straight days of losses in Asia. Doubts about the global economic recovery caused stocks around the world to go lower.

The main reason for the downward trend is the fact that several U.S. economic indicators had came in below expectations. There are now fears that the markets may have been pushed up too far, too quickly. These fears are well-founded. To me, there is no reason for the upward momentum we have been seeing for the past few weeks. Evidence of an economic recovery is still sparse and what worse for Singapore is the fact that recovery in the U.S seems to be much slower than in other parts of the world. Treasury Secretary Timothy Geithner flatly refused to consider cutting back the U.S stimulus as he says that it’s too early in the recovery to do so.

He is right, especially when it come to the U.S economy. Economic data out of the U.S are mixed at best and the U.S dollar's role as the primary reserve currency in the world as come under increasing pressure as U.S debt keep on increasing. If Russia and China decide to abandon the dollar; look out!

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