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Wednesday, 23 December 2015

YEAR 2010: ECONOMY'S DIRECTION

by: MisS VictoriA DaviD


People, mainly buyers and sellers, seem to think that today or at the moment the situation of the economy is doing well, perhaps there's no direction!

Some people think the economy is doing well, mainly those people who think it goes up. A few days ago there was a news about Chinese exports and normally when you hear this type of news and when you get people analyse it you will find that the export were something like not proper goods but something else. Such as electronics stuff or components.

So far, what people are watching when comparing the 'book' is either the Chinese economy will go down or up.

A lot of people cannot see how the Chinese economy will continue growing if everyone itself is no longer buying like America, Europe, United Kingdom or the biggest market. Most of their sales are sold to those countries that reached up to 75% or 80%.

Today, all those countries are in absolute distress, so, how can their market continue growing? There are two ways they can adapt either to export more goods to the far east in which the far east has no big middle class consumers' society or its own people could be buying more goods.

The only way its own people could buy more goods would be if the Chinese government is prepared to give their people more money which would mean increasing the value of their currency. If they increase the value of their currency the prices of their goods will go up, thus, people will buy less offers so they are in catch 22; the buying dilemma!

So, on one hand a lot of people especially fund managers want to put their money into shares, earn dividend and see growth. But the more realist people are, they can see that most growth so far comes from government spending. Those from China, Europe and America, their government just about spend much they can afford to and if they keep printing money, the bond market will stop lending them money. That was happened in Greece as I said before!

So, at the moment the stock market has come to a shaky balance between buyers and sellers because there is no direction. This is because of the export growth in China that people will think and see as a sign that the world economy is picking up. Probably, this is a growth from the very lower, much lower!

The beginning of this year there was growth after a huge down-turn and most of that growth are people, factories, countries etc. that were so frightened in that banking crisis last 2008 and 2009.

A lot of 'people' recommended replenishing inventory, which is re-stopping. It is interpreted as an up-turn in the world economy but it is not really an up-turn but a job less recovery. This is nearly when people adding put-off through fear that is why the government had the cash for clankers which brings purchasing forward and gives the illusion of growth.

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