Hello Friends,
With the holidays finally over - time to reflect on the year that was - some of the highlights - in case you missed any of those.
1. QE (Quantitative Easing) - QE1, QE2, QE3 and QE to infinity..
We first heard of this term QE back in 2010 as this was a move to purchase mortgage baced securities by the US federal Reserve to prop up the markets, to avoid a collapse & help the markets come out of the 2008 recession (sub-prime mortgage crisis).
However this short term intervention has gone to far & almost all countries are copying the American model with heavy doses of Quantitative Easing. Japan, India, the European Union - all are copying the American QE model. In many countries - it is literally flooding the economy & markets with Billions & Billions of free money & cash, leading to very high inflation & a Booming stock market as the surplus cash has no-where to go but prop up the stock markets.
This is the biggest back-door bail-out of the Markets (Wall street) in history. All the previous mistakes of the Big corporates have been written off with huge bail-out packages from the governments & now with this excessive liquidity - is creating an artificial scarcity of Blue chip stocks. there is so much money running after Blue chip corporate common stock - that it has inflated to bubble proportions again.
2. Booming Stock Markets - all over the World.
Take a look at the Market performance around the world :
DJI is up more than 23% in 2013.
With the holidays finally over - time to reflect on the year that was - some of the highlights - in case you missed any of those.
1. QE (Quantitative Easing) - QE1, QE2, QE3 and QE to infinity..
We first heard of this term QE back in 2010 as this was a move to purchase mortgage baced securities by the US federal Reserve to prop up the markets, to avoid a collapse & help the markets come out of the 2008 recession (sub-prime mortgage crisis).
However this short term intervention has gone to far & almost all countries are copying the American model with heavy doses of Quantitative Easing. Japan, India, the European Union - all are copying the American QE model. In many countries - it is literally flooding the economy & markets with Billions & Billions of free money & cash, leading to very high inflation & a Booming stock market as the surplus cash has no-where to go but prop up the stock markets.
This is the biggest back-door bail-out of the Markets (Wall street) in history. All the previous mistakes of the Big corporates have been written off with huge bail-out packages from the governments & now with this excessive liquidity - is creating an artificial scarcity of Blue chip stocks. there is so much money running after Blue chip corporate common stock - that it has inflated to bubble proportions again.
2. Booming Stock Markets - all over the World.
Take a look at the Market performance around the world :
DJI is up more than 23% in 2013.
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BSE Sensx is touched an all time record high of over 21,000
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TSX up more than 11% for the year 2013
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3. Gold is down more than 30% for the year 2013.
2013 - Paper holds more value than physical gold (seems like a joke)
3. Gold is down more than 30% for the year 2013.
2013 - Paper holds more value than physical gold (seems like a joke)
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4. Debt is skyrocketing to unheard figures.
This is the
best chart & I have saved for the last. Its a hypothetical
scenario - with the current rate of QE to infinity &
increase in Debt ceilings. Can this debt ever be paid back..
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My Analysis :
The QE phenomenon was good to start with. However many countries including India are now facing a high rate of inflation & lots of public dissent.
If this continues for another year - its bad news for the common man.
Fixed Income / salaries are not keeping pace with high rates of inflation & all the savings are for no good as Banks are offering very low rates of Interest on deposits.
People are now forced to make risky investment decisions to keep their investments inline with the rate of inflation.
People are also piling on lots of debt with low interest payments, much more than they could afford previously with higher rates of interest.
All this may be leading to a catastrophic situation in time to come & time will tell. This situation may lead to a devaluation / restructure of currencies around the world as all this debt becomes un-payable over time.
In the meantime, why worry - lets sing & dance.
Best Regards,
Read My Blog : Rahul's Café Canadian
My Analysis :
The QE phenomenon was good to start with. However many countries including India are now facing a high rate of inflation & lots of public dissent.
If this continues for another year - its bad news for the common man.
Fixed Income / salaries are not keeping pace with high rates of inflation & all the savings are for no good as Banks are offering very low rates of Interest on deposits.
People are now forced to make risky investment decisions to keep their investments inline with the rate of inflation.
People are also piling on lots of debt with low interest payments, much more than they could afford previously with higher rates of interest.
All this may be leading to a catastrophic situation in time to come & time will tell. This situation may lead to a devaluation / restructure of currencies around the world as all this debt becomes un-payable over time.
In the meantime, why worry - lets sing & dance.
Best Regards,
Read My Blog : Rahul's Café Canadian
--
Rahul
Vashisht
Quote : Turn your face towards the sun and the shadows fall behind you.
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Quote : Turn your face towards the sun and the shadows fall behind you.
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