Global Economic Outlook For the year 2009

As the global economic crisis unravels, many people are asking questions about future. Some are claiming that worst is already over while others forecasting the far worse conditions to set in. This article is an effort to look at global economic outlook from astrological perspective. The series of Bank failures and liquidity crunch was caused by the Saturn in Purva Falguni Nakshatra. Now thankfully, Saturn is going to move out into Uttar Falguni Nakshatra during November end. This will certainly result into improving liquidity scenario across the world. However, the trine aspect of Jupiter on Purva Falguni will also end and with that the government's focus will move away from strengthening the banking system, as other serious issues will begin to crop up. However, the overall effect of both these movements is likely to be positive and will result in easing out of liquidity situation. Trine formation between Saturn and Jupiter in November end, may cause events providing the boost to the sagging morals of the financial markets. As Jupiter transits into Capricorn during mid December, it will begin to give rise to inflationary conditions especially with respect to industrial commodities. It will present a serious inflationary threat to the global economy. In recent times, there has been a lot of talk of deflationary threat among economists worldwide and to some extent, it has been the supportive factor for the interest rates to come down heavily in pat few weeks. However, astrological positions show that inflation and not the deflation is the serious threat. As Rahu is currently positioned in Capricorn and now Jupiter will also enter the same sign and they together will build serious conditions for upsurge in commodity prices, which may assume serious dimensions during mid Feb 2009, as Jupiter and Rahu gets exactly conjunct. Meanwhile, Saturn in Uttar Falguni Nakshatra will force the governments worldwide to take care of issues related with general masses. Till now, governments have only tried to handle the situations related with asset deflation and banking stability. Now the focus will shift to handling public grievances and new packages will be designed worldwide to provide solace to masses. Such plans will also cost lots of money to the exchequers. As the government funds worldwide have almost disappeared in the recent rescue acts, this new funding has to come by way of printing fresh currency, which will cause serious inflationary pressures. Positioning of Ketu in Cancer has already caused serious agricultural inflation and hence transit of Saturn in Uttar Falguni will further add fuel to the fire. Hence it seems that a major inflationary scenario is building up at this stage. As Saturn enters Purva Falguni again in the beginning of February, serious inflationary pressure may cause the interest rates to rise. Saturn will be in Purva Falguni till mid of August and it will force the central bankers to go on a series of interest rates hikes to quench the fiery inflationary scenario. Rahu along with Jupiter will continue to be in Capricorn till first half of November. This astrological combination combined with Saturn in Purva Falguni will force the series of interest rates hike till November 2009. Jupiter will move out of Capricorn in between in the period of May–July and hence it will be placed in exact opposition to the Zodiac sign of Leo. Hence, this may be the time for temporary bottoming of asset prices, even though a meaningful bottom will be established only after Jupiter finally moves into Aquarius during December end. As Saturn enters Uttar Falguni again in the period of Mid August, new financial regulations will come in place, in response to the huge public outcry. Since Pluto is also placed in Mula nakshatra, there will be serious rethink about the extent to which speculations should be allowed in the economy. This will lead to very tight norms and even banning of speculation in next few years to come (till Pluto remains in Mula nakshatra, which is ruled by Ketu). As Saturn moves into Virgo by mid September, the serious depressionary conditions would begin to engulf the masses into serious bouts of unemployment, food riots, social conflicts and other such issues. Ketu in Cancer will also be aiding such a scenario. This situation will only begin to ease out, once Ketu moves out of Cancer in the beginning of Nov. To sum up the whole scenario, it seems that the crisis has just begun and year 2009 will bring serious repercussions, as the crisis begins to spread from financial sector to real economy. It seems that by September, the recessionary conditions will worsen into depressionary conditions. As central banks are forced to print currency to fund their rescue packages, the inflationary pressures will begin to take its toll. There will also be serious upward pressures on commodity prices fueled by speculation and aided by series of rate cuts, which will force the banks to reverse the cuts and go on a series of interest rate hikes. There will be norms to curb the speculation and the so called sophisticated financial instruments will face serious restrictions or even phase out. Crisis will enter the public domain and will lead to social conflicts during last quarter of year 2009. Asset prices will only begin to stabilize during the year 2010 and that lead the economic bottoming out process. Banks will have to sell the holding of gold and hence its price will also crash, in spite of the inflation and dollar weakening scenario. Stock markets will continue to witness the downward spiral, even though at the slower pace. Commodity prices will witness sharp up moves. Dollar may collapse, which may provide a helping hand to the falling crude oil prices. Even though the Indian economy is quite robust, it will still yield to the global pressures and we may witness serious slowdown and strong inflationary scenario. It appears that Indian stock markets along with other emerging markets will bottom out before the developed markets. There is a likelihood of striking the bottom around May-August 2009. Weakening dollar will put exert extra pressure on the price of gold and hence there can be a substantial crash of gold prices in Rupee terms. courtsy- Playful Mystic Shivo

Rupee vs Doller

The rupee tumbled to a historic low of 50.15 to the dollar before scuttling back above the psychological barrier on a day of skittish trading. The fall in the exchange rate coincided with the meltdown in the stock markets and the sharp appreciation of the US unit against other currencies. However, the Indian currency managed to erase some of its losses and ended the day at 49.96 per dollar after the Reserve Bank of India (RBI) intervened heavily by selling dollars. Some estimates said the central bank sold more than $3 billion today. Dealers said the tide was against the rupee right from the word go, and it resumed lower at 50.01 a dollar from its last close of 49.82. Pressure on the rupee built as foreign institutional investors (FIIs) continued to take their money off the table and sent it home. Foreign banks were aggressively buying dollars as the greenback hit new highs on world markets. Analysts, however, feel that the Indian currency may remain under pressure in the days ahead though its movement will also depend on intervention from the central bank. Urvi Gandhi, analyst at Mecklai Financial Services, said the near-term prospects for the rupee appeared to be bleak as the sentiment was bearish on account of the liquidity crunch and the global economic slowdown. Gandhi said the rupee had taken a dive because the FIIs were no longer bringing dollars into the country. These investors have so far sold more than $11 billion of domestic stocks this year. The RBI has added to the gloom by scaling down domestic growth estimates from 8 per cent to a range between 7.5 per cent and 8 per cent.

World Picture

Wall Street joined a global market rout on Friday that kicked off in Japan, led Russia to suspend trading and sent oil and other commodities tumbling on fears of a deep worldwide recession. The US stock indices fell around 4 per cent. News of a contraction in Britain’s economy fuelled fears of a worldwide recession stemming from the worst financial crisis in 80 years. China warned the outlook was grim. Foreign exchange markets saw extreme volatility with the yen rocketing to multi-year heights against the dollar and euro. The euro/yen rate fell 10 per cent at one point. Britain’s economy shrank 0.5 per cent in the third quarter, and analysts said euro zone figures showed the 15-nation currency bloc was already in recession. The pace of existing home sales in the US rose sharply in September, but a Reuters poll of economists suggested battered US home prices would decline next year and a possible recovery in 2010 would be meek at best. Stock markets went into a freefall around the world as panicked investors moved to liquidate risky positions. Japan’s Nikkei index ended down 9.6 per cent and European shares dropped 6.5 per cent. The Dow, the S&P 500, and the Nasdaq dropped around 4 per cent each. The price of US government bonds rose as investors exited stocks. “I would characterise this as a shell-shocked mentality out there,” said Thomas di Galoma, head of government bond trading at Jefferies & Co. in New York. “It’s all the deleveraging of equities ... It’s causing an issue for everyone.” Russia suspended trading on its stock market until at least Tuesday after the market lost more than a tenth of its value on Friday, hitting its lowest levels since late 2004. “The global financial crisis has been constantly spreading and worsening, creating a severe shock to global economic growth,” Chinese Premier Wen Jiabao said at a meeting of 27 member states of the European Union and 16 Asian nations.

Gold Story

Gold prices tumbled both at home and abroad, making a mockery of the status of the yellow metal as a safe haven. According to the World Gold Council, when the financial crisis had started and stock prices fell, investors had scrambled to buy gold. However, now that the crisis has deepened, investors have lost confidence in all assets, including gold. The price of the yellow metal in the international market today fell below the $700-mark to $695.10 a troy ounce — its lowest in the last 13 months. In domestic markets, the price of gold (24-carat) slipped to Rs 11,825 per 10 gram in Calcutta from a peak of Rs 14,565 on October 10. The returns from gold exchange traded funds, another vehicle to invest in gold, also fell over 18 per cent in the last fortnight and 11 per cent in the last one month. Besides, anybody keen to sell jewellery will find few takers among gold retailers. “We’re buying gold jewellery till October 28 (that is Diwali),” said a spokesperson at P.C. Chandra Jewellers’ Bowbazar branch. An official at Anjali Jewellers said it was buying jewellery made only by them. We are not buying jewellery made by other jewellers”. An official of the West Bengal Bullion Merchants & Jewellers Association said the jewellers were sitting on a large inventory.