Posts Tagged ‘crystal ball’

So, Is The Recession Over Or Not?

August 13th, 2009

Get out your crystal ball and let’s see what’s going on in the global recession. Some say its over and some say we haven’t hit bottom yet.

I know a guy who gets it right every time. A year and a half ago he correctly predicted that the markets were in for a hammering. He got that right. Then 11 months later, at the height of the crisis, he chirpily predicted that investors could make a killing in stocks. Yet again he had it right – equities promptly staged a remarkable rally.

I called him yesterday. His cheer has evaporated. He’s predicting a violent pullback because the gains of the last few months weren’t based on economic facts, he says. They were fueled by nothing at all.

Only time will tell if he is right, but to judge the wisdom of his instincts, I took another look at his earlier forecasts.

Back in January 2008, he predicted that “things are on the way down. The U.S. is trying to stimulate private consumption artificially, but it won’t help. Even in Russia there are plenty of risks because a huge proportion of its GDP is associated with oil.”

In November 2008, my man became optimistic. The crisis was raging in world markets but by and large, he was predicting an upturn – acute crises have to peak at some point, he explained. The acute stage doesn’t last more than a year or two. He didn’t think this crisis was very much different from any other, though he acknowledged that the entire world economy would fall sick, including India, China, Brazil and Russia, all having been infected by America.

“Things will get worse, but not much worse,” he predicted. His conclusion was that it was time to buy stocks, because the potential for gains was greater than the potential for more losses.

Today in August 2009 he’s downbeat again. “The gains this year aren’t based on any real economic developments. Even if the economy was showing clear signs of recovery, even then I’d say stock market prices are too high. Share prices have become bloated, and back in the broad economy, the signs of recovery are weak.”

He predicts that the market is going to screech to a halt because its recovery wasn’t based on solid economic foundations. At these levels, share prices present more risk than potential reward.

The downturn will start with the institutional investors and snowball. “The big players, the institutions, are afraid that the market will get away from them. Their nightmare is to miss the rally. They’d only get out when they were sure a bubble had developed, and that’s exactly what happening. Economists are saying that the recession is over. The problem is that people are captive to their own concepts, because they’d rather get it wrong together with everybody else. Nobody buys a sweater in the summer, even though they know that winter will come.”

You figure it out and if its good, let me know!

Tags: crystal ball, Global recession, Stock market recovery
Posted in Economy | No Comments »

Looking for some quick money? Here’s an outside chance.

August 7th, 2009

The way the stock exchanges around the world are behaving, this may be a better bet if you are a gambler at heart. But you’ll be playing against me and the entire 60 million population of Italy. The prize is the SuperEnalotto jackpot, currently standing at 119 million Euros or a cool 171 million dollars. That’s a whole lot of bread.
All it will cost you is one Euro or a miserable $1.44 for two tries. And all you have to do is to match 6 numbers out of 90, a change from the usual 6 out of 49. This difference changes the odds somewhat. In a 6 out of 49 lotto, your chances of winning are about 1 in 14 million. In the Italian 6 out of 90 version, your odds drop to 1 in 622 million – so you need to choose your numbers carefully. That’s how they manage to rack up these huge lotto jackpots. Wins are few and far between.
This size of jackpot grabs people who normally shun the lotto because they consider it beneath them or who think it’s a ruse run by the state to raise taxes. So Italy is deep in the grips of lotto fever. The ongoing recession and the growing unemployment fuel dreams of instant wealth and sales of lotto tickets are booming. A recent report by the Censis social studies institute estimated that in June, Italians were spending an average of 7.8 million Euros (11 million dollars) a day on SuperEnalotto tickets.

In Varallo, a town of 7,500 in Piedmont province, the mayor convinced his five-person cabinet to each chip in and buy a 100 Euro ticket, which allows for several combinations of numbers. “Just imagine, we could abolish taxes, pay off mortgages and bring a little happiness,” said mayor Buonanno, in a telephone interview. “We will keep on playing until our six-number combination is drawn. We could buy some top soccer players, like David Beckham and Alessandro del Piero. That would put our town on the map.”

Psychiatrists and officials of the ever-present Roman Catholic church are warning lotto players that that the quick-fix hope raised by gambling can lead to long-term woe.

Everyone is entitled to dream and that’s what lotto offers, a slim chance of an instant lifestyle change. Some strapped town councils are even looking to Lady Luck. Earlier this week, the small Sicilian town of Ficarra diverted money from council salaries to bet on numbers associated with the local patron saint, the Virgin of the Assumption. However, in the end, it is Lady Luck who will decide who gets the jackpot.

I would love to have a ticket for this jackpot, but I’m not flying to Italy to buy one. I’ll just stay home and continue my day-dream right here. It started yesterday when I took my wife shopping and I parked next to a brand new Mercedes S type. Have you seen this machine?

Tags: crystal ball, Drugs, Flu, Lost Output, Stock market recovery, Swine Flu
Posted in Employment, Finance | No Comments »