Yesterday’s bad news for World Economy
and my analysis on 18.11.2009

Did you hear the news yesterday? Germany did not exit the problems, as they were telling to us some months ago, but they are still stuck into crisis, ending the year with 0 real growths. Many other countries of Europe follow the same direction, reminding to everyone that the better times will not come soon and for sure they will not come without more effort…

If you remember, I had written to you an analysis about 2010. It was November 2009 and it was part of my overall analysis regarding Romania and 2010. You can check out the whole text here: http://www.realinromania-blog.com/romania-2010-do-we-really-wantto-reach-bottom-and-stop-falling/

The World Environment: Instability and Fragile Improvement

We probably just reached the bottom “in papers”

Yes, it is true. We started receiving news about positive GDP growth in several major economies all around the world. USA surprised us, Japan too, Germany, France and Italy were a bit positive as well. “So are we going up from now on?” many friends ask me. Well, not exactly. When we reach the point of slightly positive growth, it is obvious the bottom we were all searching to spot. So, now we know that many countries have reached the bottom in terms of GDP deduction (as presented in the official data). This does not mean that from now on all the problems are solved and that economies can return to old happy days.

Is it really over? Or not?

I strongly believe that the leaders of this world are still worried for the situation. If things were ok, we would have seen several measures targeting a normal economical expansion. On the contrary, we continue watching governmental programmes which try hard to protect people and their jobs, to expand their economies by injecting cash in their markets etc. These measures are important, vital, correct, but not “normal”, we are still in a turbulent period.

Example: The biggest exporter of the world, Germany, achieved to reach a weak GDP growth mainly because it directed consumption towards cars sales, paying 2.500 euro for every new vehicle, when you would give up to your old one (this is why Dacia reached tremendous sales there, it was already cheap and with the 2.500 euro bonus it became… the new German “toy”). France did the same more or less, USA as well (”Cash for clunkers”). England didn’t follow this measure and saw its economy shrinking for one more trimester, the 6^th consecutive. Don’t confuse yourselves with Japan. They exit now the crisis, but theirs started some years ago, it was not so much connected to the one we all live lately.

So, Germany’s +0,7% GDP has any connection to the real life of people? How can it be like this, when all the countries have reduced their imports from 10 - 80%? This year we watched all the account balances shrinking, as the imports of all fell much more than their (falling too) exports. When everyone reduces importing, how is it possible for the biggest exporter to exit the crisis? (especially as the German Governor of the central bank had stated during the summer that the local banks there have almost 800 billion euro toxic bonds in their treasuries). This is why I say that these figures are just for the papers, they don’t represent for the moment something real…

(for the rest of the post you can click here: http://www.realinromania-blog.com/romania-2010-do-we-really-wantto-reach-bottom-and-stop-falling/)

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