Why I feel the economic “recovery” – based on recent economic data – should be cautiously considered..
To begin with. The jump in stock markets cannot be considered a confirmatory recovery signal. Stock markets are speculative indices and are based on the whims of most people more than hard-facts.
The hard-fact is that a 260Trillion dollar asset bubble burst in this recession. Most of this 260 trillion dollars is frozen shadowy assets. And all stimulus packages combined – about $2 odd trillion – account for a meager percent of the actual damage. All these apparent “positive” signals are nothing but effects of the stimulus packages that were let out to lubricate financial clogs. And giving policy-makers their due credit, the clogs are opening up.. thanks to these tax-payer buoyed stimulus packages. Which is why we have the good positive data flowing in. But, at the end of the day, there is nothing huge to celebrate. Cause inevitably, we’re to plunge back into the abyss.
As far as the real estate markets are concerned. Yes, they are showing healthy signs of recovery. But, with the many billions of dollars going back into the rusted banking systems and in turn being used to unlock most of the troubled real-estate assets – answers for the price-rise & demand for land. Once these billions of dollars stop pouring in… the demand will slip back… Cause, real estate too is a speculative market. Huge investments (again, indirectly through stimulus packages) came in, and investor sentiments soared along. Accounting for the spike in prices so far.
Commodities. Well they aren’t rising due to any economic upheaval. Poor monsoons have created the deficit between the demand & supply chains. Which answers for food price rise.
Ben Bernanke of the Fed. Reserve says that the US is out of recession. But he also says that job stability and economic equilibrium will take time to return to normalcy. Hmm. ??
All the economic data released so far… has been released by governmental agencies.
Whenever there is any kind of calamity, the government deflates the actual number of casualties. So why not, in times of apparent recovery, the government be inflating its figures? I mean it may sound insane to suggest, but think about it.. it is a logical possibility!
So thats that. We need to exercise a little more caution celebrating over good times – which will eventually come – but not so fast. Two years and $2 trillion dollars don’t seem enough to weather decades and hundreds of trillion dollars of mess!