Thursday, January 28, 2010

Obama speech review

Obama has got it wrong in the President’s speech. The state of the nation speech has been a stage the Presidents are supposed to be populist and they had even lied outright, Remember George W. Bush.

Obama simply toed the line. Let’s bust his theories one by one:

Theory No 1:

China is not waiting for USA to grow.

To tell you the fact based on GDP figures China had never in recession. China had a double digit GDP growth under super low interest rates. Commonsense economics says if it is not sustainable on a long run, then interest rates must go up to prevent the overheating of the economy. But so far China has only hinted an interest rate hike and not tightened it.

So how can China grow at this rate even at this rate? It has a single window for clearing projects, addressing concerns and disputes when it comes to “Modernization & Industrialization”. Without being concerned about health hazard, labor problems and destruction of environment, American investors go hunky dory on investing in China and dump Detroit by the sideline.

China need not depend on USA as US$ is freely available to the Chinese government through Wall Street investment bankers. Besides they have worlds biggest US$ reserves as well.

Theory No 2:

Germany is not waiting for USA to grow.

In fact German exports to USA are completely on shaky grounds, as the consumer base in USA shrinks, so does German need to produce more. Germany never had a local. Economic problem, this was all USA’s fault.

Theory No 3:

India is not waiting for USA.

Man! Please buy Obama a TV with lots of good channels preloaded.

Ever since Obama’s angry speech after Brown’s speech; Indian stock markets has lost 9% of its value. Ever since Obama has spoken and declared “Worst of the storm has passed”, nearly 3% of market capital revived; by day end it should reclaim 6%; by week end it might be even more than 10% as American banks put their money back in so called “Emerging markets”.

Obama wanted to halt the tumbling dominos of major stock markets and by the look of it, he has been successful. So what’s in it for ordinary Americans besides the consolation that trading is still done in USD.

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