A clearer vision

The picture of what is coming in the next 2 years is getting clearer.

In the next 6 months, three key issues will force the central banks in Europe and USA to print more money to stimulate the economy.

1) Baby boomer generation folks in Europe and USA begin to withdraw their funds from their retirement accounts. However, as they spend prudently, the economy is not boosted.

2) Record youth unemployment rate which result in more social unrest.

3) To weaken their currency and strengthen their exports

This stokes inflation and worsen the economy. Large companies face collapse and funds will leave USA and Europe for safe heaven in Asia. US$ to S$ weaken to 1:1

To arrest inflation and USA and Europe hike interest rate. This stemmed the outflow of funds to Asia. US$ to S$ rise 1: 1.6. Asia increase rate but not as high as USA.

The rise in interest rate in US and Asia, caused massive deleveraging. Companies and government downsized to cope with the reduction in demand. Many Jobs were restructured and lost. Many homes, cars, investments were force sold as consumers could not afford to pay the monthly installments. 5 years passed and things got better. Stock and property market rebounded.

The strongest of the US banks and Europe banks survived the financial crisis and thousands of weakest banks closed.