The Banking and Strategy Initiative

Chillin' out till it needs to be funded

It's not the recession, it's more quantitative easing

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Though neither India nor China are export led economies, the frontier markets like Mongolia and Philipines, looking to get ahead in Asia as Turkey are very much so, doubly now as US FDI exports ring the cash registers.  India and China cool down but remain growth fed engines for the larger Economic worlds. Also MENA instability and European pathos ensure that the global focus continues gravitating to these immune markets in ASia and look for an answer to the Dollar’s , Swissie’s and the British Pound’s problems. Sovereign recession stares in the face of almost all European economies and the US borderline case thus remains an important watch. However the strengthening Dollar after Swissie’s about turn and Euro’s postponement as a serious candidate as the World’s reserve currency by about a decade is he new wrinkle line on the face.

Why a strong Dollar?

To reiterate the strengthening Dollar is the first one that preemptorily throws a red flag up / spanner in the works for the sub 3% US 2012 economy. It does make things uncomfortable for the global Economy but at the same time keeps global commodities down. The Chinese Yuan also remains scared to rise faster as of now as Chinese policy makers want to take no mean chances with the new king of Currencies they want to unveil.

But indeed if there is more Quantitative Easing in the United States

However, their and Asia’s reticence comes more from the troubled lands proclivity with printing money even as it is by itself clogged with $1.5 tln in unused Federal cash. Chances of QE3 have brightened merely as the US realises surviving on a 2% growth tick and just averting the label of a recession economy may not be enough. And thence the Yuan may well appreciate at the time QE3 liquidity rocks the boat and gets safe higher ground irrespective of whatever speed of appreciation it chooses, the Asian growth continues to however get into inflationary rouble at the expense of geo political stability as Food and Fuel inflation have yet to be found a systemic cure in any Economic Trade centric global model.

Why are we here, and how are we getting out of here?

Thence, we continue to focus on moving parts inside the India, Chinese and even the cash rich US economic engines that are keeping the growth dream alive right now. even the GReek solution needs more Chinese Private investors for the bellyache to pop off.

The spectre of recession in the United States

The United States has probably three main problems it has not solved since 2008 and is now in a cheesy standoff against the world and its own citizenry, with no clear solution in sight

Without Banking growth, there is no recipe for growth:  The discussions of a recession come from almost flat credit books at all major banks and Financial institutions even as loan reserves ramp down faster than trouble brews every quarter Attendant problems in paying $30bln per head penalties to the mortgage administrators and shutdowns in proprietary and structured desks without the requisite leverage or risk return profiles mean that the GDP growth engine that is banking is mostly dead to the core and needs a long steady rejuvenaton fluid on theproverbial “death bed” Even the CFPRA is biting into the banks body suits and then relaxng it is going to leave another unregulated mess of charges on your bill and mine

Without Jobs, the consumption growth is ready to explode: Leaving aside unfortunate corporate stand offs and cyclical changes in leadership, the thriving cash rich US corporate sector led by the larger, more innovative design and retail labyrinths may have succeeded but they do not feed the welfare state or the need for better and more number of jobs for US citizens and immigrants thhat can strengthen it. One should set aside growth in Luxury retail too as the same is almost a exclusively independent sub economy whose contribution to the Economy will never be a substantial double digit one. However the growth in Autos is stunted at best, recent months even killing the recovery mid season to not more than a mllion units a month.

Services should be growing more jobs: The Jobs scene at its worst is predicated on the Industrial activity where one does see Services recovering and that is what one must now harness as the same optimism is still alive in not just ISM non mfg but also Chicago PMI thought the Philadelphia Fed and the Empire state surveys already show what globally everyone has been feeling in Srvicess too – an entire bankruptcy in new and backlog orders leaving no new bus

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iness to come. The 100, 000 job cuts in Banking won’t be that difficult to absorb as they come in retail branch units or in trading desks that had to attrite. The much bandied U6 number and the much discussed 20-2% overall unemployment in the Economy cannot dream of going back to industrialisation and funding the welfare state is probably a must but must be done efficiently, not with a QE3 and not without fiscal discipline in the USA




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