Thursday, April 25, 2013

Economy: Express Train On A Local Track

The current situation of the world economy reminds me of the New York Subway (thereformedbroker). Trains are often delayed and slowed down. Sometimes an express train, that usually runs on a fast track, gets relocated onto a local track, which is slower and has more stops. But anyway, usually you reach your goal and New York`s economy and social life, which depend heavily on its mass transportation system (because of lacking of parking spaces), function very well.

The upswing of the global economy, which started in spring 2009, is slow and had many stops as well. But the world is steadily healing thanks to extremely low interest rates, climbing company profits, tamed commodity prices, rising consumer spending in the US & China and technological progress. As a result U.S. stocks gained more than 120% since the start of the recent bull market and are close to all-time highs.

I reckon that this situation is better than a high growth economy which could lead into overheating, exploding commodity prices and jumping interest rates. Hence the slow-go economy has a lot of breath and could continue its steady upward trend for many years to come, fueled by the new technological revolution (advances in Internet, robotics, 3D-printing, Nanotechnology, genetic engineering and more) and the catching up process in China and other merging markets.

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