Current Global Economic Situation

This is my opinion:-

- Inflation due to earlier US expansionary policy. Globally, the world is flooded with liquidity and cash.
- Prices of assets are inflating especially in Asia. Property prices have been increasing since end of 2009.
- Prices of food have also been inflating. Food in Singapore are getting more expensive. Prices of transportation have also been going upwards (Bus fare and the most recent taxi fare).
- However, interest rate remains low. Interest payments cannot cover inflation.It encourages people to stay away from saving and encourages spending. Because saving will mean depreciation in the value of cash. Inflation is further induced.
- It also encourages people who have cash to invest, in equity, in real estates etc.
- People who had retired are the biggest loser as their savings are affected by reduced purchasing power. Expansionary policy had in fact spread the burden of the financial and economic mess to the general public. Each one taking a slice of the losses made by companies who had paid CEO in millions during better times.
- Prices of equity are very much affected by global markets. When Euro financial markets are not doing well, Asia markets are affected.
- Real estates prices are still resilient. Question is when will it be back to a sane level. When real estate prices fall, people who had purchased at higher prices would suffer losses. This is another way in which expansionary policy helps to spread the woe of economic troubles to general working class public.