Early this week, investors, economists, reporters, columnists, analysts, were all swept away on the American Dream. Consumers were once again spending and the world was right once again.
Unfortunately, sooner or later the bubble has to burst. On Tuesday, George Osborne’s econimic speech was booed and hissed at. The papers and his fellow politicians swore at him. For once, the UK government was speaking the hard truth and the UK public just doesn’t want to hear it.
Sure everyone likes the American version, where you just spend, spend and spend some more, until everyone is happy, and our National Debt will be left as an inheritance to our grandchilder. The UK combination of David Cameron and George Osborne, have laid down a roadmap for the Commonwealth, to lead them back from the financial abyss.
The rest of the world should be watching these men, they have not taken the easy course, they have not taken the popular course, they have taken the course that is right for their country. It is not winning them votes and unfortunately, they will not receive praise for years to come, when history is written.
They have adopted the term “austerity” they have set their course and they are true.
Regardless of your personal belief, you have to respect the men for standing their stead. For keeping their path against all the odds.
Atleast the UK is not following in the paths of the European destruction. The UK has ringfenced their financial institutions, implemented austerity programs, reduced spending and unfortunately cut jobs. But it is a neccessity. If this was a private company, we would see their stock soaring.
Today’s news has now added India into the mix, one of the bright spots of the BRIC program, the development of the Indian Economy has been one of the more positive goals set by the IMF and the BRIC pact. India has truly bloosomed, but now that they have they are exposed to the global economic forces. Economic data released today, should India’s GDP fell and their growth rate dropped to 7% from an estimated 8.5 projection.
The European Markets were all tumbling as the dream of Black Friday and Cyber Monday, the not so complete news about the EFSF and the likelyhood of a final deal evoliving at the Decemeber 9th meeting of the EU. Monday, the markets were mislead by erroneous news about the IMF and Italy, which was complete falsehood. Tuesday the markets were hoping that there would be some plan emerging from the EU leaders meeting. There was bits of news, odds and ends, but nothing that could be called a real plan. Today, markets are reacting to the lack of leadership and direction.
Banks are falling, after the downgrades by Moodys and S&P yesterday. Bond yeilds are rising.
What is an investor to do… sit on the sideline or run to Gold, USD and other safe havens.