Shooting the $hit

It seems that the octopus that is recession is slowly spreading its tentacles around the entire world. Recession is starting to look more like a global pandemic than a domestic endemic. The U.S dollar is finally starting to come out of it’s slump and is making headway against the 5 major currencies; noted by the steady augmentation of the dollar index. The frightening part is that three of those 5 major currencies, the Euro, British Pound, and Yen,  are flirting with recession.

What causes concern is the 0.2% contraction of the GDP in the Euro zone. The Euro sector is one of the most stable sectors in the world and this regression is the first since 1990. The problem all circulates around the prices for crude oil and commodities. As either of those increase exports will decrease due to rising prices of goods. What is even worse is that as currency strengthens, as is the case in the U.S, exports will decrease even further due to a rising dollar, making the cost of goods even more expensive.

  What adds to the problem is the perennial threat of inflation, a predicament that is becoming more prevalent across the world. Most countries try to truncate inflation by simply increasing interest rates but this also dampens growth, making it even more difficult to combat recession. Countries such as the U.K and Japan are also experiencing recession in the housing markets, which slowly leads to an infrastructure collapse of the economy. A weakened housing market and regression of retail sales is causing banks in the U.K to cut interest rates again, precisely what happened in the U.S.

The only countries that seem unaffected by the rise of commodities are those in the Middle East and North Africa, the oil rich countries. Growth in China and India also seems to be advancing as planned, due mainly to the consistency of their currencies which has little effect on exports. Right now the world is hurting for help and the only way I see a solution to this is by cutting down on raw material usage. If the world went on a “diet” it’s pockets would get fat again.

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