One of the founders of Google, Ram Shriram is in India to oversee his investments and he believes that the worst maybe over for the US economy, but added that recovery would take some time. "Though the stimulus is helping, the lagging indicator such as unemployment will continue to rise." He is not in favour of a second stimulus as of now.
He think the world has gone through a major change. It is tectonic shift and the US has been through a lot of convulsions during this period since the great depression. I think the worst is behind us at least from the point of view what we see in the US. The recovery appears to be very shallow at this point which means it will be a long and prolonged slow recovery. The stimulus programme with USD 700 billion is being spent over the next six quarters, two quarters already underway and then four more ahead of us. So, USD 700 billion on a 14 trillion economy is about 5% of new money pumped in and that is good news. That is helping.
He think the stimulus is helping. But the lagging indicator such as unemployment will continue to rise. I am in the camp of not having a second stimulus to see how this works through at least through the end of this year into early next year. If it looks to be tough and we are heading back into very feeble or negative growth then I think we should consider a second stimulus but at this point, the Fed funds rate is at 25 bps and there is solvency. However, there is no liquidity in the economy and that is what the stimulus is helping with and hopefully that should begin to show results in the next two quarters.
He think the world has gone through a major change. It is tectonic shift and the US has been through a lot of convulsions during this period since the great depression. I think the worst is behind us at least from the point of view what we see in the US. The recovery appears to be very shallow at this point which means it will be a long and prolonged slow recovery. The stimulus programme with USD 700 billion is being spent over the next six quarters, two quarters already underway and then four more ahead of us. So, USD 700 billion on a 14 trillion economy is about 5% of new money pumped in and that is good news. That is helping.
He think the stimulus is helping. But the lagging indicator such as unemployment will continue to rise. I am in the camp of not having a second stimulus to see how this works through at least through the end of this year into early next year. If it looks to be tough and we are heading back into very feeble or negative growth then I think we should consider a second stimulus but at this point, the Fed funds rate is at 25 bps and there is solvency. However, there is no liquidity in the economy and that is what the stimulus is helping with and hopefully that should begin to show results in the next two quarters.
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