‘Foong on Finance’ with Keat Foong: Fears of a Double Dip
- Aug 19, 2011
Nouriel Roubini, “Dr. Doom” who predicted the 2008 crash, is reported to have now tweeted that the next dip will be “uglier than ugly … off the scale bad.”
Would the apartment sector, which just saw a strong turnaround in occupancies beginning last year, have to say goodbye to its good fortunes? So soon?
Someone commented in a blog that investors know economics, and hence it was not surprising that the stock market plunged, not rose, immediately after President Obama signed the bill that would cut federal spending by $2.4 trillion.
There seems to be the notion that the federal deficit is somehow responsible for a weak economy, and by implication, the stubborn unemployment levels. And that therefore, as President Obama suggests, the top priority today is to reduce the federal deficit: Corporations are not expanding because they see the federal deficit and so have no “confidence,” to expand and hire more workers.
I don’t know about you, but I don’t think a company would not expand and hire workers because it sees the huge federal deficit.
Rather, it seems more likely businesses are not expanding because there is no strong consumer demand for their goods. And that consumer demand can be boosted by government spending in the short run at least. Government handouts, for example, will be spent by struggling consumers immediately.