13
Apr
09

Proof in the Pudding?

With the Easter holiday behind us, it’s time to get ready for some Q1 earnings reports. The S&P will continue releasing earnings as we try to decipher where the headwinds of the economy are taking us. We will begin tomorrow with news from Johnson and Johnson (JNJ) and a re-cap of Goldman-Sachs’ (GS) performance for the quarter. Intel will announce after the bell Tuesday.

This economic malaise will likely go down in history as one of the worst. It’s effects have demonstrated that while the emerging world (SE Asia, E Europe) has a hand to play in the global economic landscape they are still “emerging” . Eastern Europe is wracked with debt and challenged to find financing for the short term debt coming due this year. One struggles to understand how a worldwide globalization build-out will continue anytime soon – given the environment. That said, governments of the world (in apparent acceptance and agreement to the dire nature of the issues) have pumped unprecedented levels of wealth into the global economy in an effort to stabilize debt (credit) and capital requirements worldwide.
As China begins to play a more significant role in world economics it will be interesting to see how the country evolves. The Chinese Yuan, the currency of China , is becoming more and more significant. China’s economy is growing quickly, but it is still small , in GDP comparison terms, to the United States. Part of the reason for this is a lack of reliable infrastructure. China finds itself in routinely inefficient circumstances (poorly allocated resources) and sometimes embarrassed on a world political stage due to the lack of regulatory standards the country has been able to uphold. One can only think back to Upton Sinclair’s “The Jungle” — as the United States wrestled with similar (but different) issues of safety and product standards. Hopefully, the Chinese govt can learn quickly from the mistakes of the past and adopt an effective means of ensuring the safety of Chinese-made goods for use both inside China and globally.

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