Greece, Spain, Italy and now US. Is Recession coming?

by on August 9th, 2011

Recession is at the foot-steps, and there is no denying that the logic has to come back and win over intentions. There has been talks about a lot of booms and bursts but for last 70 years US had always maintained AAA ratings from the rating agencies.

Image Credit: businessinsider.com

What does this mean? This means the rating agencies were either ignorant or unwilling or afraid to bring any logical analysis reports on US Economy. Standard and Poor has done excellent work by lowering the credit rating, and even though the agency has got serious remarks from several corners. Many folks went ahead and said they wont do any busienss with S&P, and others said the agency has gone crazy.

But the reality is different. American Economy is far from being ok. Its not good at all. If you keep 50 Economic Analysts of the World and ask them to rate India, China and US, the most stable and forward looking is clearly India. India has energy, huge youth population and the new breed of entrepreneurs that are aiming to put a mark in the World.

For US, its just the opposite. US was once known for its performance and now the same country needs to bail out banks and automobile companies to remain afloat. The country is in direct war with 3 nations — Afganistan, Iraq and Libya, and is in indirect war with many nations. The general people hardly know about whats happening outside and most of the jobs they do are basic jobs that any illiterate can do.

Now, if we come to China, it is the nation run with great leadership and vision to rule the World. It was once the factory of the world, and is now slowly becoming the innovation hub. Chinese have their strengths — discipline, hard-work and vision.

When this is the structure of societies of these great nations, when we look back at the economic data. American is in red for around a decade; it has fiscal deficit while China and India are building huge reserves. China has more than a Trillion Dollar of American Treasury, while India has more than $300B of Forex Reserves. The US Treasury was last known to have just $73B, which is lesser than Steve Jobs’ Apple’s cash reserve.

The situation is actually alarming. We heard Greece entering the area of economic collapse last few months, and the nation is helped by IMF and EU to keep afloat. Italy, Portugal and Spain are fighting hard to keep their economy afloat. Reason — fiscal deficit that has come from uncontrolled spending and irrationality.

After knowing all this, when I learnt that India is rated at BBB-, while US is just brought down from AAA to AA+, I can hardly believe the rating agencies. Spain has better rating than India.

God bless them whoever makes such ratings and god help more to the folks who actually believe it. The economic crisis or recession of 2011 is happening, and it is happening to make world more rational. The rating agencies have survived the great recessions of 1973, 1995, 2001, and 2008. But if they fail to keep people informed this time too, they should be the ones shut down.

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