Sunday, January 06, 2008

Year 2008: the Year of recession

Year 2008 is the year of the Rat according to the Chinese calender. If you ask me , i would say its the year of recession. While i would be happy to be wrong, i feel this year would be the "official" start of recession, at least for the western developed world (mainly US and UK). I am more curious to know how the developed world's recession will affect the emerging world. The emerging world (essentially brazil, russia, china and india) are coming to age and this recession should tell us how much of their economy is tied to the world / US economy and how much is based on their internal growth.

The reason why US in particular will enter recession is simple - Unbridled spending coupled with unwise business decisions will result in a crash - A big one. So this year, the ongoing financial crisis will accelerate into a meltdown. The possible after effects of this recession would include

1. The value of dollar would go down, but i think still dollar would be the key currency (because there is not currency or group of currencies to take up the position of dollar)

2. The world economy would be more detached from US economy

3. The rise of the emerging markets

Fun times :)

1 comment:

Tasha Gets Money Smart said...

I agree. I think it's gonna be fun and exciting year too. :)