Almost 15 months after the demise of Lehman Brothers, one wonders whether the financial is is over or whether we are in the second half of the real sector crisis. We had an odd situation whereby the financial markets are having a record year of profits after the goverments have rescued the financial instituion by massive guarantess and zero interest rate policies.
By the end of November, the Dow Jones was up nearly 20%, the China share more 80% gold prices 45% and oil and metal prices over than 45%.The US Dollar has depreciated and carry trade in creating bubbles in the emerging markets.In the real sector, industrial production gowth and gross domestic product remain negetaive in the advace countries,while unempolyment is over 10% for the EU but Chinese growth is back to over 8% and emerging markets are all beginning to show signs of recovery.
Some economist are calling the financial crisis is over and the others says we have wasted a good crisis.The party in Wall Streets is not over because no one has taken away the punch bowl.Some Wall Streets are going to get bonuses even more than the peak year of 2007, less than a year after they were rescued by the goverment. Other thinks that will zero interest rate policies, more bubles have been added to the punch.
This one in a hundred year financial crisis will be debated for year to come, either because it was solved quikly or dicisively or beause the majarity has bees fooled by the short and quick recovery thet disguised a more serious real sector depresion that may be much more prolonged than expected.
In 2008, when the price of oil reached 147 dollar per barrel,central bankers were in a dilemma whether the price oil lead to global inftation. Less then three month later, the world crashe into diflation. In the emerging markets,we have exsess real engineering capacity because much of our production was designed for exports to the advance markets.
