Stock Markets down to pre 1997 levels

Stock Markets down to pre 1997 levels

(Amsterdam,Feb 24, 1300 CET)
With stock markets in a continuous slump and reaching pre 1997 levels it's about time to make an analysis and/or prediction.
The markets are going down to the pre dot.com levels but the dot.com was an overoptimistic and unrealistic bubble as well, so in fact what we witness now is a double (or triple?) correction, the correction of the subprime lending bubble and the dot.com bubble. It is also a late correction of the after 9/11 bubble, the flood of the markets with cheap capital to stimulate the economy and keep up consumer levels. Anyway it's more or less a reckoning of the last 15 years.

In the mean time the world has dramatically changed, the more than 25 years old warnings about the dangers of the unlimited use of fossil fuels and the Global Warming (CO2 levels) got more media attention, and last years record Oil Price was a clear warning for the whole world and all levels of Society
The most powerful nation in the world, the United States of America, was first hit by the banking crisis, the credit crunch and the economic downturn. The Global Economy and the Financial system is interconnected and the crisis spreads very fast, as could have been expected.
But the U.S. has already made a shift with the election of Barack Obama as the new President. The large and enthousiastic groups of new voters like the 'millenials' or generation X and the reduced influence of the 'baby boomers' has been largely responsible for this.

The new U.S. Administration needs some time to restore and turn around the economy, huge amounts of money are needed to repair the crumbling infrastructure and the neglected health care system.
Until now the new President has not been challenged by international political developments and events. But the international credibility of the U.S. is heavily damaged in the past 9 years. The financial crisis is still far from over and trust in banks is further decreasing instead of increasing.

How about the rest of the World?
Although the recession is beginning to have an impact worldwide and politicians are becoming aware of the dangers (even the D word, e.g. "Depression" is heard occasionally), we do not expect a thirties style recession. May be for the population of industrialized nations it will mean a few vacations less a year, not buying all kinds of useless crap, postponing of the buying of the latest up to date car every year, quitting all kinds of unnecessary services, and in general literally the trimming of fat and becoming leaner.
Which is not such a bad idea to start with anyway.

Now, a couple hours later (17.00 CET), and the U.S. markets open and slightly up it is time to reflect.
Today (February 24) some rather dismal figures were released, U.S. Consumer Confidence index is plummeting, Housing prices dropped at a record rate in December 2008 and Fed Chairman Ben Bernanke warning the U.S. Economy is in its worst slide since the 1930's and recovery could start in 2010, not 2009.
In all this means there is no recovery and the bottom of the economic slump has not been reached yet.
So the global markets will go down further as well as will World Trade.

The European Governments are on a frantic mission with regular international meetings which probably will continue all Spring and part of Summer until the summer holiday season.
Protectionism and Nationalism is on the rise -as always in these circumstances- and has to be avoided at almost all costs. However, the French President Nicolas Sarkozy is in a 'catch as catch can' situation in his own country and has to push a soft protectionst agenda.
This will cause a turmoil in the EURO Zone and possibly a setback. May be a lot of European goverments have to pay the bill, because they simply forgot they have a more than 300 million population with it's own wishes and dreams. People want solutions, a better life and fast, they have no message for Eurocrats.
In it's first major crisis in 50 years the EU is facing a difficult time ahead.

(Feb 27, 2009, Amsterdam)
We think this global recession will turn out to be worser than expected an take longer than predicted by most experts. It is regrettable to reach this conclusion (and prediction) but we have no other choice. Goverments and Institutions around the world have to get used to new realities and have to come up with new strategies for economic restoration and development. New '21st Century Economy' strategies and this means the (long and difficult) road to new ways of thinking and changing habits. It is not going to be easy and it won't happen without troubles and disasters along the road, but there is no alternative.

More to follow...