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WOW !!! ITS SLOW AND SHRINKING

US economy is shrinking at slower pace. We have reports which indicate that The US economy shrank slightly less in early 2009 than previously thought, for me this is satisfactory news; you may ask me is it shrinking economy or the pace of shrinking making me happy.

I will say both. I always believed and claimed that the US economy and its impact is visibly larger then its actual strength. Undoubtedly it’s the biggest and strongest economy of the world but at present scenario US economy is not as influential what it has been in last 15 years.

I mentioned in my previous posts that at present the developing countries must refrain themselves from fast recovery as it will not be able to sustain for long and they may soon get another setback which may be unrecoverable. Present situation is due to the advantage what US enjoyed from over a century due to its intellectual capabilities. All they need is to spend and focus on new innovations; what they are always capable of.

United States needs to concentrate on their innovative skills and its time to introduce new technology and to create more viable options to keep the focus of the world towards them. Major competition to US will be coming from Germany, China and India in the future other then France, Russia, UK(?) and Japan. The only bailout for the US will come from its Human and Natural Resources.

Liquidity issue will disturb world economy for a limited time period only. Very soon we will see more competitive product in the world market for existing trade options.

This is the right time when United States of America should slowdown its speed from existing road and crate another path if US wants to remain world leader for long time.

My advice to US is to concentrate on new Inventions and use the technology for creating more viable and sustainable product line; in manufacturing as well as in service sector.

Good NEWS, if its slow and shrinking.

Who Killed the Lady; The African Story

Above photograph is a real crime scene: one of the murders done by Richard Trenton, the notorious serial killer.

You must be wondering why I have placed this scary picture in my blog with is related to the world economy.

Like in social world we do have serial killer in financial world which is silently destroying our economic spectrum. Slowdown now again shown its impact when the Global economic crisis influence the West African nations to push back their plans to launch a single currency this year, now the new launch date for regional bloc is in 2015.

This new economic bloc will have Ghana, Guinea, Nigeria, Gambia and Sierra Leone; the introduction of common currency in west Africa, would be comparable to the European currency, however at the present this procedure has experienced frequent setbacks and shown sign of worries related to the approach of member nation to their plan.

Like European Union some other economic alliance came into picture similar to one as mentioned here; any unpleasant news will certainly raise the questions on the future of these alliances. The biggest economic bloc BRIC remains ineffective since its inception also raise doubt on the serious planning by these nations toward common growth.

Above news summary is another indicator that still, the nations of the world does not understand the interdependency of all developed and developing economy. In my opinion the developed nations especially European union along with other large economy must support and bail out small economic blocs those are directly effected with the slum and can rescue developed countries if get the right support within time. Delay in the decision by the West African nations in not in the favor of other regional economies.

China: The Giant Panda

In latest economy news; Bloomberg quoted Mr. Su Ning that China’s economy showing positive sign. This came immediate after when some indicators shown that China is no more going to remain the fastest growing economy in comparison to its nearest rival India.

Mr. Su Ning, who is the Vice Governor of People’s Bank of China, said that the world’s third biggest economy is showing positive signs and the government is staying confident. According to Su, they are confident and will fight through the difficulties, while the overall situation is stabilizing; the economy’s fundamentals are still not solid, quoted by Bloomberg news.

I have seen that Chinese economy is more trusting on propaganda rather then understanding limitations of their economic capabilities. They are always eager to prove themselves accurate.

Exports and Unemployment are two major concern of China. Both together directly effected the gross domestic production as well as local consumptions.

Like Americans, Chinese too moving to show fast recovery and prove the communist economic model better then most open economies. But again the biggest mistake they are doing is similar as Americans; not waiting for natural healing.

We have seen in past that economies do take longer time then expected if they are not fundamentally strong. China is still not working to grow domestic consumption and cut-out its dependency on exports; which is the key to fight out with present depression. China’s close economic rival (India) sustained global shocks due to its local markets and lesser dependency on international consumption/exports.

Another warning for China that the Chinese banks must learn from Indian banks those are still cautious for landing money in unstable market. Indian’s proved better then Chinese and Americans for holding vital decision. Especially liberal landing policy is still not been opted.

China have got to study from their national animal; the giant panda. It takes a long time to grow. Patience is the key. Sometimes it’s good to look into neighborhood, when you are not getting great ideas for long term sustainability.

Glitters but not GOLD

Another sad story in the line, Reuters mentioned that World Bank warned that prospects for the global economy remained “Unusually Uncertain” despite recent signs of improvements in parts of the world. I think common man really get confused with these short time predictions. My question is; do we need to come-out with these funny ideas those contradict and stands nowhere even in their own ground? Stock Markets in world wide play around the sentiments and we have seen that these kinds of reports do nothing but create a wrong impact on this over sensitive market. As Reuters quotes world bank my cut its 2009 forecasts for most economies. In my opinion we need to develop a new terminology for this fluctuating forecast. It’s like that you predict a winner for a marathon and keep changing your prediction after every 5 minutes. These are not healthy indicators in longer run. In the new world we are adopting a “save yourself” mechanism where the bigger economies hardly bother about dependent economies; European union remained unimpressive to handle these crisis whereas Americans are showing foresight by strengthening their ties with India to gain ground in Asia’s fastest growing economy; (Quote: recent World Bank prediction is that India’s growth will beat china for current fiscal year). The title of the said report is “World Bank sees most economies in deeper slump” If the world is a global village then we are surely divided between resourceful and resource-less. World Bank reports are indicators of the future disaster what may go beyond any control. Growing terrorist activities and week economic scenario will take human race into a dark age; may be we are leading towards an era where we will have two different worlds. Time is not to change the vision but SHARE THE VISION.

Understanding the Misunderstanding

Very recent study done by the World Bank related to the global financial crisis where they announced that the developing world will grow 1.2 percent this year after growing 5.9 percent in 2008 (excluding India and china), and developing economy will shrink by 1.6 percent in 2009.

The reason behind the World Bank’s projection is the dependability of developing economy on external resources consequently put them on back track where India and china are focusing on their internal resources as well as targeting external one.

Private investors are opportunists and like work under umbrella where they find their interests are protected and investment grows faster, unfortunately other developing economy are unable to justify their stands in current scenario and they are still waiting for some bail out from external support through private investors mainly.

Developing countries (need not to mention other then china and India) couldn’t maintain own mechanism to safeguard national interest and their dependence on private finance put them into a situation where they are exposed to this kind of situation.

According to the report the private investors are abandoning projects in poor countries in massive numbers, as they deal with their own problems in wealthy financial centers in New York, London, Frankfurt and elsewhere.

Annual report of World Bank on developing country financing, predicted that international capital flows will tumble to $363 billion this year, down from $707 billion in 2008 and a high of $1.2 trillion in 2007.
Present financial crisis is considered the worst since the great depression of the 1930’s. And the global economy has fallen into its first recession since World War II.

Developing countries do need to understand how to use internal resource for a sustainable development; private investors will not come for charity as they understand the success mantra is to work in reasonably favorable environment.

This is the high time to understand which was always misunderstood. The formula of growth is vested in internal resources only.