A dire trip around the world
Today's Financial News - Posted December 5, 2008
The economic situation across the world is far from pretty. Almost everywhere we look, trouble is brewing and citizens are getting poor. It is no wonder that America, in the face of its worst crisis in decades, remains one of the safest investments.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): I know that it is starting to sound a bit cliché, but if you think the economy is rough here in the United States, you should take a quick trip across our borders. Almost every nation on the planet is facing difficulties.
China is watching as its desperate citizens flee the lack of jobs and security in the country’s cities for the traditional life they know in rural lands. Trains stations are overloaded with urban refuges looking to get the heck out of town.
The situation in Mexico is just as bad. With oil revenues plunging and the funds typically shipped home from Mexicans working in America drying up, the country is facing the threat of an full-on economic collapse.
In Russia, well, you do not want to even hear about the desperate situation Medvedev and Putin are stuck in. As I write, the price of a barrel of crude is trading for under $43. It is destroying the energy-exporting country’s revenues and tossing any attempts at a balanced budget out the window.
When Medvedev compiled Russia’s budget earlier this year, he planned on an average price of his country’s Ural crude at $75. Even worse, he figured on $95 per barrel next year. The way it is looking, Russia may not be able to expect even half of its anticipated figures.
The situation is getting desperate.
Who’s that funny-sounding guy on TV?
Just in case you do not have a Russian satellite feed and missed Putin’s “calming” speech last night, the prime minister did his best to spread a message of hope amongst the country’s poor. When asked during the three-hour interview what the country’s broke and unemployed citizens are supposed to do, Putin’s only answer was to rely on government intervention.
It sounds a bit like America right now.
Fortunately, the situation is not nearly so dim here in the land of the free and the home of the brave. It turns out our lack of domestic oil production is a good thing. The bursting of the commodities bubble is one of the few positive aspects of the latest American recession.
It sure hurts to pay four bucks for a gallon of gas during the once-in-a-decade oil boom, but the vast majority of the time low oil prices are an economic savior. I cannot wait to go on a buck-a-gallon celebratory road trip later this winter.
For investors, the relative strength of the American economy will soon become even more apparent. We drug the rest of the world into this mess and soon we will drag it out.
Our economy has remained one of the world’s strongest. Our treasury is seeing a huge influx of foreign investments looking for security. And most importantly, foreign investors will put their money into American companies long before they turn to their own corporations.
Over the next six months, you will see the American equities markets rebound while its foreign counterparts remain in the gutter, reeling from the pain of crashing energy prices.
When we look around at the rest of the world, America’s problems are not all that bad. After all, some countries would kill to have just one major automakers worthy of bailing out. We have three.
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