From Absolute Return Partners, London - A good read on asset bubbles (US government to regulate them (hey, say what?), Obama's plans, real estate, the consumer and the global economy.
Our conviction remains high that the global economy will stage a recovery later this year but, unfortunately, we remain equally convinced that this will prove temporary. The main culprit are US property prices which are doing more damage to the purchasing power of US consumers than generally perceived. The poorest two thirds of US households are effectively bankrupt and the wealthiest one third are facing substantial tax hikes. This combination is lethal for US consumer spending, and what is poisonous for US consumers is bad for the global economy. We are therefore facing several more years of sub-par economic growth unless countries with high savings such as Germany can persuade their people to spend more.
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