Economic Outlook …
I get the feeling that this is 2000 all over again, this time the housing market playing the role of dotcoms/telecoms that imploded. The root cause remains the same, namely Federal Reserve’s easy credit see-no-bubble policy, ably assisted by Asian central banks, including Japan, China and to a lesser extent, India. This policy has unleashed the inflationary beast world-wide. The housing bubble is global in scope. I notice it in California, and I notice it in Chennai - literally prices have doubled or tripled in the last 5-6 years in both places.
Inflation is really running strong in India, to the extent that the ruling Congress Party felt it politically expedient to warn the government headed by itself inflation. Indians, of course, hate inflation, and will severely punish the party in power when inflation goes up. Partly it comes from the affinity to gold - almost every Indian knows the prevailing gold price, so inflation is hard to hide. I believe this one single fact, more than anything else, keeps government power in some check in India.
But the end game from all this easy-credit is going to be misery. The only question is the depth, breadth and duration of the misery. Stock market around the world, as usual, sense that something bad is coming our way.