Index stays in Gloom territory

Index Dec11.pngFinancial markets jumped this week on news of liquidity moves by the central banks. But the blog’s own IeC Boom/Gloom Index remains in negative territory, as the chart shows (blue column).

Investors seemed to forget for a moment that the eurozone crisis is not fundamentally about liquidity. It is about solvency. Greece, and some other countries, will never repay their debt. So the banks who lent to them will lose their money.

Equally, the size of the bill for the financial follies of the 2000s is slowly beginning to become clear. Official UK forecasts now suggest that people “will be worse off in 2015 than in 2002”. Thus the ‘austerity’ reading (red line) is rising steadily, as governments cut spending and increase taxes.

Of course, the situation would improve if growth recovered. And this could happen, if companies began to target the needs of the over-55 age group, who are now 29% of the western population. This is one of the key messages of the blog’s ‘Boom, Gloom and the New Normal’ eBook, available on free download.

Sadly, however, many companies still seem to be unaware of the opportunity.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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