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Moneys are shifing away from Emerging countries to Developed countries ! think twice .

Few days ago many Experts and Gurus were telling that money is shifting away from Emerging countries to Developed countries.

Now where these moneys can go -------


Japan

Recent Natural disaster makes Japan more vulnerable when we compare it with other countries. If  we forget about this natural disaster, Japan’s economy is suffering from long standing Deflation.



Gradually it is recovering just a bit but it is still to far to go.
It’s currency is appreciating lot and that makes their Export more uncompetitive in the international market and their exporters also are not making much of profits. Savings in bank are crossing the loan amount, Govt. Debt figure is much in Japan !



Unemployment figure is fluctuating in Japan. But if economy is not doing well how can the employment figure will do better !

Somewhere I saw they need $309 billion to rebuild the country after the natural disaster, this is easy to say than done considering the time it takes for it ! 




Japan’s GDP growth rate is not good in fact it’s exports are not doing well due to recession in other parts of the world and their own currency appreciation.
And as I told previously that it will be very hard for Japan to come out quickly from this problems. So it is sure that though some amount may be invested in short-term on Yen to make profit from rebuilding process, but ultimately I don’t see any major cause of moneys to go in Japan.





EU Area   

The biggest problem of Euro area is the Sovereign Debt. Even after helping through rescue fund & helps from China and Japan, problems are not solving. Many Rating agencies are downgrading their Sovereign Debt, like the latest by Moody’s about Portugal sovereign debt. Things are not solving easily there.
Let see first their GDP growth rate.



There is not much to look on it, I think if we exclude Germany from the stats, then things may be worse.
Ireland’s economy shrinks by 1.6% in the 4th quarter, because of decrease in consumer spending and exports. Some are feeling that Greece will going to default on its debt. So there is not much good news for these problematic countries.



Their inflation rate is increasing. Everyone talking about the interest rate increase in coming days for Euro zone. Though ECB is delaying that, but I do not think they can delay that much if things go this way.



There unemployment figures is not good, due to overall recession, here also Germany and some other countries are better.

Though Germany and few others are quite immune from many problems of this Euro-zone. But since Germany is the main force of this Euro, in future it may be the testing time for them also.



US 

The most prefer chance of these moneys, obviously if anything is shifting!  That must be US.  

There unemployment figure is not something which can reflect that economy is stable now, especially you cannot compare it by looking only 1 or 2 months figure.  It needs more time to prove, that it is OK.



Though some data are showing that they have a little bit improvement in unemployment numbers, but critics say that first of all people are not looking for jobs because they will not get it and due to Bad weather many people does not come out  for that. So I think the we can find true situation after some months.



There GDP figure is little improved now, even they revised their estimates. Let see in future what in next.

US new Home Construction plunge 22.5% in February compared to January. The main things is it is the 2nd lowest level of it’s life.
One data shows that US house prices fell by 5.2% in February, lowest in 9 years. Many House repossessions have forced down the prices and in coming days more are expected as unemployment figures are not improving  much.




WPI roses in US more than forecast in February mostly lead by Food prices. PPI rises  1.6% from the prior months, highest since June 2009. Here my question is if all these inflation data is showing that inflation is increasing, that means someway public expenditure is increasing as today’s data also showing that consumer spending rose more than forecast in February 2011,  then ----

Why they are not increasing their interest rate?   If economy is in good condition then they have the luxury of doing that!

Why they are buying  $ 600 billion Treasury by the end of 2nd quarter?   Why they are trying to keep interest rate low ?
One answer may be, due to their Housing market & Mortgage situations !

Here it is necessary to say that inflation figure is not only disturbing the Emerging countries but also in US as their economy is going to grow slower due to pressure of oil price.

What about their trade deficit!

Why they are not ending their stimulus?

Except Govt. backed Financial institutes and some computer or I.T related companies I will be looking in the results of other companies.

If  we see the stock indexes of some of these places then we can see that its are not much different with others.





Experts were talking about the Gold bubble, I think bigger bubble we can see in these indexes. 
Because the thing I do not understand as I said in past, say for US,  if their economy is not good during past few years how there Stock index is performing so well. The first impression is,  all the taxpayers money is invested in stock market to make it artificially high. Because if during last few years, their stock market also crashes then it will be a big Tsunami for US economy.


Now if some sound person likes to invest in any place, where he is going to invest ?

Suppose, if suddenly situation comes that no one agrees to trade with that Currency, which is backed by Debt.  Then what!

I do not think anyone is  going to invest in those problematic places though they have a past goodwill but any person must first try to invest in a place where he has the security. Where they find some good future. 

Though Emerging countries are suffering from inflation, better to say  Oil & food lead inflation. But you cannot play the same record every time!   people will not going to eat that.

Money will decide it’s own way, ultimately it will choose the place where it can find good amount of Growth and Security.



NOTE :  Please see the disclaimer below this blog.

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