On 3rd August 2011, the Federal Reserve introduced a $40 billion per month stimulus in order to accomodate a debt ceiling raise, which was both prudent and necessary. The additional $45 billion per month in mortgage-backed securities buy-back was an additional support, and it has definitely supported the housing market in the U.S., which has seen a ten percent increase over the last year.
Both these measures have proved to be of great benefit to the American economy, which has created many jobs and heatmaps of happiness, and is the beacon of growth which gives hope to the rest of the world that the worldwide economic Recovery is on track and indeed, hopefully, proceeding to Prosperity in due course.
The figures for the sequestration cuts which is causing sniffles of the European Austerity variety in the U.S., were that the cuts equalling $85 billion over 12 months would be imposed. That is virtually reducing the positive impact of the above stimulus measures by one-twelvth each year. Although to some accountant such a figure may not appear harsh, in reality when people lose their jobs or have their social security cut, the effects make people weep. Instead it may be better to create gainful employment for the people so they are busy and happy.
The record-low interest rates are encouraging to house-buyers and people purchasing vehicles, and with a feel-good factor people are shopping as never before and hopefully buying the latest fashions, buying real books as well as e-books on Kindle or iPhone, and able to afford high-end tablets like Apple.
Is there a stockmarket cycle that is about to catch everybody unwares? I am not at all convinced of the validity of the arguements being put forward. The world, especially the mature economies, under the aegis of the wise central bankers, are in a growth phase, feeding the river that enriches all and brings sustainance and happiness. Of course, some sectors of some economies which are not in sync with what is happening the world over will see negative impacts, God help them, and some people will give credence to the scholars putting forward their ideas of the new cycles. To me, it appears like a storm in a teacup.
Going forwards, I see a growth phase, with tensions hopefully defusing in the Middle East with wise leadership of Mr Netanyahu's coalition in Israel, more freight passing through the Suez Canal, President Xi Jinping taking his leadership in China augering well to enhance the pro-growth policies of the Honorable Hu Jintao, and the Opec leaders seeing the value in keeping Oil at current or lower levels to aid the worldwide economic Recovery, which shall of course auger well for the Opec economies too. For all this, I pray.