S&P wary over global recovery
The good news, according to S&Ps chief economist David Wyss, is that the global economic recession wasn’t really much of a recession at all. The bad news, however, is that the global recovery isn’t really much to be get excited about, either.
Although the easing of interest rates by Alan Greenspan and other leading bankers means the global recession has been relatively mild, Wyss says that excess capital together with continuing war fears mean that much of business spending is on hold.
To put things in perspective, Wyss notes that in 2001 a fiscal surplus of $334 billion was predicted for 2003; a $400 billion deficit is expected for the year-end.
Bob Janjuah, the global head of credit strategy at ABN AMRO, seems to be in agreement with S&Ps sentiment. The global recovery, particularly the US recovery, is only liquidity led, and according to Janjuah when the consumers stop spending - and saving ratios return to their historic levels – the limited nature of the recovery will be revealed.
Janjuah also adds an ominous warning. With $34 trillion of debt in the US amounting to around 300% of GDP, Janjuah says “the only time debt has been so close to 300% was in 1928.”