« GLOBALIZATIO VIRUS »

This crisis is destroying the confidence of not only the banking system, but also confidence in the economy as a whole, challenging and affirming the requirement to build a new system of values and evaluation of new fundamental bases of trust. All Governments have begun to "inject" money into the banking system (only in Russia pledged about 6 trillion rubles of public funds, these measures are adequate in many ways, except, in my opinion, for 175 billion rubles to support the stock market), which is indispensable, however not sufficient in order to return the confidence.

To succeed, in my view, it requires harmony on one hand from professional side, from technological point of view, and psychological part from the market participants on the other hand. If that is not happening, the money don’t reach the real sector, but «hang» in the banking system. World GDP is estimated at just over 30 trillion U.S. dollars. The volume of derivatives issued - 420 trillion U.S. dollars. The amount of money, which was announced to be directed by all the governments of the world for the banking system, amounts nearly 3 trillion U.S. dollars. It turns out that in a short period of 3-4 months, 10% of world GDP would be injected in the world economy!

The main question is how will the the value of money will change against the assets?

(On one hand, the amount for «real» world is just gigantic, but on the other hand to the virtual world is very small).

In the retail sector, consumer inflation will accelerate, the demand will likely fall and the demand for real-estate without mortgages will decline. Comrades from the government in Russia want to profit, making everything to devaluate and buy it cheaper. If you click on that “link” there is interview, concerning that matter, Russian version).

In my later blog I might expand the thought regarding it further more.