Allright, here are more signals that the global economy will neither skyrockets nor drops like a stone into the ocean. Basically people are convince that the U.S. economy will most likely crawling for years instead of months before the worst enemy – unemployment – is over. We, and to a large extent the Americans, may be lucky that this round of recession did not suffer the same fate as the 1929 Great Depression. But this recession may have created a new economy landscape that we have to live on for decades to come – the scale-of-employment model pre-recession is history and a new employment model may have emerged.
It’s true that layoffs have slowed, at least for now, and (hopefully) the housing problems have bottom. However jobs remain scarce and the economy will not stage a V-shape recovery anytime soon. The fact that the Federal Reserve holds the bank lending rate at zero to 0.25% speaks volume of the U.S. economy’s health. But who can blame Ben Bernanke and his boys when the figures still show consumer spending remains sluggish, hiring remains weak, wage growth is almost stagnant and the banking sector is not lending as much as Obama’s administration hoped they would.
Low inflation also means companies couldn’t raise prices of their products simply because the once fearless American consumers are not spending as they used to be pre-recession. Of course you shouldn’t blame some of the analysts who predict that 2010 will be an explosive year for the U.S. economy when everything will be back to normal, though I would take that as a new-year wishlist instead *grin*. In actual fact you don’t really have to go very far to ascertain the health of the U.S. economy. The financial sector will tell you whether what those good-for-nothing analysts’ “wishlist” that you should be buying stocks is a good advice.
The banking stocks are literally still in disarray as if they’re headless chickens moving without clear directions. Otherwise you wouldn’t see Citigroup Inc. (NYSE: C, stock) shares still trading at three bucks a share and the attempt to unload 5.4 million Citigroup shares at $3.15 share (8.7% discount). Heck, why sell at a discount (and at the current low price) if indeed everything is so rosy – get the picture? I would hold the shares if I know I can make many times the profit in another year or two, unless of course I’m not sure if the bright sky is in the horizon.
So, is Obama doing his job or at least his administration knows the formula to the economy problem? His critics said otherwise but let’s give him another year and we shall see if he was actually as clueless as Bush’s administration in tackling the problem. By then we can blame Obama – just like how Malaysian Prime Minister’s wife, Rosmah, blamed the “Men” as the source for the current global financial crisis. Naturally the smarty Rosmah thought she women should be the Prime Minister or President to ensure such economy crisis does not happen *WoW*.
Well, maybe Rosmah was right after all considering she has chosen the right man to marry; the highly intelligent Prime Minister Najib Razak who thinks the time is right to push for the GST (Goods and Services Tax) – scheduled to be implemented by the middle of 2011, never mind that the average-Joes are having difficulties putting food on the table. Thanks to former PM Mahathir’s cheap labor economic model which is obsolete by now, the fact remains that the proposed 4% GST will bring hardship to the poors due to inflation.
While it’s true that the current 5% to 10% service tax will be replaced with the lower 4% GST, the truth is the “comprehensive” coverage in 4% GST will sweep across every item you buy – like a tsunami. Directly or indirectly the chain effect of higher costs (raw materials or finished goods) will be be passed down to the consumers. Of course the ruling government wouldn’t care because they’re finding it equally hard to get monies to meet their growing appetite for “development projects” (or rather leakages). The country’s two main revenues – oil and income tax – are not growing as fast as Najib’s administration expenditure thus naturally extra money need to be “extracted” from the obedient people on the street.
Supposingly the economy fully recovers by 2011, do we have the same buying power like the Singaporeans whose government also implemented the GST?
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