World Bank: Whoops!
Source: http://feedproxy.google.com/~r/ContrarianProfits/~3/yvLkltoFTso/18174Posted on Monday, June 22nd, 2009 | In Market Commentary
The World Bank downgrades its world economic forecast, A few lessons from the school of German-style hyperinflation, Will we be seeing you in Vancouver this year? And plenty more…
Wait…scratch that…make it negative 2.9%.
Somebody must have slipped a few Rude pages to the honchos over at The World Bank. It seems the Washington-based lender is hedging its bets. A 2.9% contraction in the global economy this year is a far cry from its March estimate of 1.7%. But growth will be back to 2% next year, the bank assures us, slightly down from the 2.3% they originally expected.
What went wrong during the springtime, we wonder? Didn’t unprecedented levels of stimulus flow from government taps around the world? Weren’t Bernanke and Geithner manning the pumps? Didn’t the global media confirm sightings of green shoots? Or were they recovery saplings? Your editors were too busy “calling B.S.” to keep up with all those flowery euphemisms for delusion. Still, shouldn’t we be smelling the turnaround tulips by now, on our way back towards bull market springs?
Not just yet, says the bank of the world. The following adjustments must be made to the March forecast:
- Output in the U.S. will drop by 3%…not 2.4%,
- Japan’s gross domestic product will shrink 6.8%…not 5.3%.
- The Eurozone will have it a bit tougher too, contracting 4.5%…not 2.7%.
- And the globe as a whole? Uh…eh…it won’t decline 6.1%, as predicted. Better expect closer to 9.7%.
The lender also called for “bold” actions to hasten a rebound (an urgency upgrade from “tough” actions) and said the prospects for securing aid for the poorest countries were “bleak” (adjective upgraded from “slim”).
Does that mean the “delude-a-bulls” are spent? Is the sucker’s rally over? Insiders seem to reckon so. Bloomberg reports that, “Executives at U.S. companies are taking advantage of the biggest stock-market rally in 71 years to sell their shares at the fastest pace since credit markets started to seize up two years ago.”
Worldwide markets did enjoy a pretty nice rally over the past couple of months. Perhaps that’s the end of the first suckers’ rally. Maybe last week’s 3% mini-selloff on Wall Street was only a harbinger of things to come.
Personally, we wouldn’t expect any hope of a sustainable turnaround until The World Bank downgrades its forecast from “bleak” to at least “apocalyptic.”
Joel’s Note: Our annual Agora Financial Investment Symposium in Vancouver, British Columbia is rapidly approaching…and this year marks the 10th anniversary of The Daily Reckoning. So, this July, the Symposium will be focused around a “Decade of Reckoning”…four days that will help you to gain greater insight on how to turn investment ideas into the profit opportunities of the next decade.
So, will we be seeing you there? This event is already 70% sold out, so you’ll want to be nimble. Click below for all the info:
The Agora Financial Investment Symposium: July 21-24
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