The global financial meltdown of 2008 has been characterized with an increasing public debt, excessive borrowing and spending by the economically developed economies, loss of faith in the financial system, processes and professionals and a systemic failure of the monetary policy in the US and Eurozone. With the American economy slowly trying to rein in it’s spending with a lot of budget cuts and austerity measures, the global markets are now once jittery as they nervously watch the debt crisis now unfold in the Europe.
The European debt crisis started burgeoning in the late 2009, when banks in the “powerful” economies began to appear fragile thanks to the increasing debt levels of the economy, a crisis of confidence emerging with the widening bond yields.
The current epicenter of the crisis is Greece, with its accumulated high level of debt (115.0% of GDP) and a budget deficit of 13.0% in 2009. The Eurozone is currently in financial jeopardy, trying to battle not only the increasing financial turmoil but also continuously balancing the vested political interest of certain countries.
The Small and Medium Enterprises (SMEs) play a catalytic role in development process of most of the economies as they constitute a major part of the industrial activity in these economies. In India SMEs account for about 39.0% of the manufacturing output and around 33.0% of the total export of the country. Especially in a country like India, SMEs act as the backbone of the economy.
Traditionally, Central banks control and help the economy by controlling interest rates. But today, the Federal Reserve is going to use an unorthodox method of pumping money into an economy, in order to jump start job growth.
Under the disguise of “Quantitative Easing”, the Fed will buy long-term government bonds and pump an equal amount of cash into the economy. You can read more about QE here.
Under the label of QE, the Fed will buy long-term government bonds, perhaps one trillion dollars or more, adding an equal amount of cash to the economy and to banks’ excess reserves. Expectation of this has lowered long-term interest rates, depressed the dollar’s international value, bid up the price of commodities and farm land, and raised share prices.
Proponents of QE2 would point to Japan and say the policy known as “quantitative easing” is likely to prove ineffective. They term it a leaky hose, rather than a monetary Noah’s Flood.
As the title suggests – choose a stock (or option, or commodity) that you would want to be invested in for the next fortnight. It doesn’t matter if it’s just speculation or a detailed fundamental or technical analysis, post your pick and let us know why!
Since I get to post – I’d pick Shree Ashtavinayak Cine Vision Limited (CMP INR 25.55) – it rallied on speculation of the Salman Khan starrer ‘Dabangg’ which turned out to be a blockbuster hit and has grossed more in its opening weekend than some of the others hits like ‘3 Idiots’. Also, the hype behind other releases queued up like ‘Golmaal 3’ around Diwali should help the stock rally in the coming weeks.