Economists at the World Bank predicted that the global economy will shrink for the first time since World War II with trades at its lowest in 80 years. You may not like it but it seems this Great Recession that we’re riding on is going to be the longest since World War II, making the 1981-82 and 1973-75 recessions which lasted 16-months each like a tame-rabbit. The 1981-82’s recession was considered the worst in America’s history since the 1929’s Great Depression. The good news – unemployment hasn’t reached 1982 levels, at least not yet. But the Dow’s tumble since its peak in Oct 2007 is worse than the 1929-32’s period with a mind-boggling $11 trillion in market capitalization wiped out.

Even the new U.S. president couldn’t save the day – U.S. stocks have lost $1.6 trillion in market-cap since Barack Obama’s inauguration. Billionaire Warren Buffett admitted the U.S. economy has “fallen off the cliff” over the past six months *as if we do not already know*. While it’s true that it’s too late to sell your stocks now many investors are still divided if they should scoop now in anticipation of a mini-rally since the stocks are so, well, cheap now. Nobody dares to declare that the stocks are cheap and we should buy like crazy, not after these so-called experts were burnt on numerous occasions. They’re still haunted by Bear Stearns, Freddie Mac and Fannie Mae, Merrill Lynch, AIG and now Citigroup and General Motors. Time will tell if Barack Obama is another Ronald Reagen *grin*.

Basically everyone is waiting for the worst to come and go and hopefully they can weather it. Yes, that’s right. The worst is yet to come and in certain countries such as Malaysia whose population of less than 30 million were duped by their leader that the country was insulated from the global recession, the havoc that’s coming could create the mess people have not ever seen before. So far unemployment has only affected the manufacturing sector and people are still enjoying themselves as if they’re insulated. Youngsters are swiping their credit cards like there’s no tomorrow and the Mega-Sales still attracted huge crowds, just like during the old good times. But who can blame them when they were not even aware of the previous 1997-98’s Asia Economic Crisis?

All the eyes are towards the much-hyped mini-Budget scheduled to be announced the PM-in-waiting Najib Razak tomorrow, 10th Mar 2009, which would see RM25 billion to $35 billion in stimulus package. Anything less would see severe punishment to the already ailing stock market. Besides the big numbers analysts are also wary if there’re substances to the project or plan associated with the stimulus package. If analysts think that it was another marketing talk (or sloganeering) with little justification and many grey areas as to the implementation and execution then you will witness another round of stocks dumping. People are extra cautious about their investment nowadays and it would be wise to keep their money close to their chest than to put it into local stock market especially with the current political turmoil.

Other Articles That May Interest You …

• Citi Stock at $1 a share – Cool; Right Issues – Boo
• Great Recession’s Scope is Deep and Broad
• What can Najib do to increase Rating and win Voters?
• Economic Uncertainties breed Denial Syndrome?
• Stimulus Plans, to be spent Wisely or ended up Elsewhere?

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March 9th, 2009 by financetwitter

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