Who is in more trouble - Europe, US or Asia?

'Who is in more trouble?', well all 3 are and there are no exceptions and no continent can escape economic recession. It is like a huge chain, downfall of the housing market and dire unemployment in the US directly affected the European and Asian countries. That is why we see governments in all these continents have been coming up with stimulus packages to minimize the problem if not stop it.

According to Nader Naeimi, a Sydney based investment strategist with AMP Capital Investors, said: "These sorts of stimulus measures are steps in the right direction. We need circuit-breakers to unlock the credit logjam." (source: bloomberg.com).

Australia wants to be away from recession as hence the government announced $42 billion Australian Dollars more. But there is still pessimism floating in the market, like one Chief Asian economist at Credit Suisse Private Bank in Singapore, Joseph Tan said:"Stimulus measures will help minimize the downside to some degree in the short term. There’s always that shadow hanging down our heads. Jobs are still being lost, consumption is coming down and economies are falling." (source: bloomberg.com).

Hence, all economies are in trouble and are likely to come to the stage of recession at some point in the future and stimulus plans are going to give relief in the short-term and not long term. There are tough times ahead for all, so be prepared.

Markets are nothing but a James Bond movie

It is evident that financial markets are unstable and lack liquidity. No matter how hard the Federal Reserve tries to pump in cash in the banking sector, the U.S. dollar seems to be seeing a downward turn. When after a long drop dollar does go up for a single day investors rejoice thinking 'tomorrow never comes'. It certianly looks like a bond movie to me, James Bond- Reserve Bank trying to save the banking sector and the investors - the heroine, and the slowing economy (credit losses) - villian. The only problem in the real situation is that the rescue process may take as long as a year, that is if the markets recover on consumer confidence.Comments are welcome on what others think about this.

Liquidity problem still prevails

Financial Markets are still facing liquidity problem. The U.S. Federal Reserve is trying it's best to maintain confidence among investors by cutting interest rates on the borrowing loans given to banks. Due to interest rate cuts government securities have risen giving a safe investment option compared to the volatile equity markets. Rising bonds have still not brought any respite to the weakening dollar, which has weakened against the euro, the yen and the pound. The fall in dollar price has effected the commodities too, at one time these were traded to hedge against equity risk but now the commodities cannot go any higher as a correction was going to happen and now it has. Oil and Gold are overvalued and they are bound to go down. Not a good time to buy gold. The Federal Reserve needs to come up with a very good plan to bring some confidence back into the markets. But one thing is sure that this credit loss crisis is far from getting over, it will continue in the next year too, unless there is a miracle.

Indices rise on Fed. cut news

Markets in the U.S., Europe and Asia rose yesterday,18th March 2008, after news was going round that the Federal Reserve will cut the interest rates further on direct loans offered to banks. The markets witnessed a very good trading day showing an increase between 3 percent to 4 percent in the markets overall, showing some amount of confidence generated among the investors. Apart from this there were still concerns among investors that the credit loss crisis faced by banks is going to widen even more, discouraging people from taking home loans. The Manufacturing also slowed down a lot, effecting the industry and it's earnings. At one end the Federal Reserve is figthing hard to retain investor confidence by cutting interest rates and on the other end investors are loosing hope of any recovery in the credit loss situation, creating more liquidity problems in the market, which is lowering the dollar rate against the Euro, the Pound and the Yen, putting the pressure back on the Federal Reserve to come up with a concrete, effective and a permanent solution to the economic slowdown. It is very likely that the Federal Reserve may not be able to bail out all the banks during this year, it is very likely that this situation is going to continue in the next year also.

Dollar in trouble , Gold rises

Gold has been trading above $600 an ounce since a week now , it is expected that it will go even higher with falling dollar after news of the US slowing economic growth . Gold has had a 6.1 percent rise since October 23rd.

When you look at the yearly rise Gold has risen 19 percent , whereas the dollar has declined more than 7 percent against the Euro.

There have been analysts who say that the Gold may trade easily between $570 to $630 , the volatility seems wide unless the interest rates are not reversed by the US and the European countries.

Therefore , I feel that the Gold will definitely see a rise with the drop in dollar.