Blog Why Not?!

W-Shaped Recession
A downturn is expected
Economics, 090625

So, from what I gather it goes a little something like this: The rally in commodities was boosted by the fear of rising inflation and much due to the Chinese raw material shopping spree. Now some say there is overcapacity in both oil and steel, and that the Chinese government (who is the owner of that part of the economy) is sitting on a pile of raw material which possibly could be turned into stuff that people could buy. But who will buy it? People in Europe? And US want to improve on their export. And will the Chinese save the world through spending? I heard somewhere that the Chinese consumer is very well aware of how much you have to rely on yourself to provide for yourself. High oil prices is not exactly stimulating the economy either.

So, since there are deflationary pressures on the overall economy investors now seem to shy away from commodities and gold. My guess is that some will flee with their capital to rent funds and the dollar has already improved.

But then again we have what seems as a general opinion that the overall shape of the dollar in the long run, is not a good bet and that the stock market will almost certainly outperform the dollar in the next ten years.

Then again we have this stuff with the Chinese. What do they expect of the future? How will they invest their money? In what will they invest their money? Do they perhaps believe in their own stock-market?

What this tells me is that if you have a little money on the side, then you could take the opportunity to buy commodities and gold, as they fall from grace. Then eventually people will start worry about inflation and dollar will not look so interesting and perhaps commodities and gold will do better again. Perhaps BRIC could also be a good idea in the long run.

I guess that those who got a good sense of timing, will prosper on this market just because of the huge swings.

- Aramis

Comments

Blog Why Not?!
Personal Blog of Aramis
Welcome. Filter: Show all, Personal, Programming & Design, Spirit, Economics.

There is no particular goal to this blog, but to convey what I find interesting and worth writing about. Get blog as RSS or ATOM