Markets under Pressure Again
June 22, 2009The markets had a good run in the last few weeks but the trend is reversing. The global economy is shrinking faster than expected; unemployment rates continue to rise; states have huge fiscal problems; foreclosure worries threaten a recovery; these are just a few reasons investors doubt that the markets can continue to rise. Below are a few information nuggets I find interesting and relevant.
Historical Comparison Between Depression and Now
Martin Wolf has published an excellent article “The Recession tracks the Great Depression.” It shows that the drop in global industrial output after June 1929 matched the one after April 2008. It also shows global trade volumes, global money supply, and fiscal balances. It is interesting to compare these trends although for deeper analysis, we would need more information.
Iran Unrest
Iran experienced deadly demonstrations over the weekend. It is hard to know what still goes on in Iran, if there is any resistance left, or if the crackdown is complete. It is clear, however, that the Iranian government has effectively shut down communications with the outside world. It expelled many journalists or put them under house arrest. It deep filtered Internet communications.
According to Reuters, Iran supplies about 4.5% of the global oil supply. This means, we should not expect the demonstrations to have much impact on the markets. Of course, all the demonstrators who were wounded or died in the name of just elections and freedom do not really care about the oil supply. May their sufferings and deaths not have been in vain! May we support Iranians in their quest for freedom!
Healthcare Costs
The New Yorker published the best analysis on healthcare cost I have read in a long time. Unfortunately, the findings seem to be a story from the handbook of Bear Stearns, AIG, etc. This is a must read article if you are interested in healthcare reform.
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