Astitva.... The Fountainhead

Tuesday, January 17, 2006

A new year... comes with its own set of problems

2005 was not the best year for this world. With the large number of deaths all over the world owed to natural disasters, there would be few who would disagree. 2006 has not showed the best start either.

For starters, Bird flu has been catching up in various parts of the world. With deaths in Turkey, China and Indonesia, the situation does not look too bright.

If that were not enough, the weather in Asia has taken a twist as well. While Southeast Asia has been hit with a non-stop monsoon, South-Asia and Central-Asia has been hit with the worst cold in decades. Many have died in Pakistan, India and China due to this. The cause has been attributed to the low pressure cold wave initiated from the Arctic. And while all this occurs, the leaders of great nations will not let Kyoto protocol get anywhere.

And last but not least, the financial market has taken an awkward turn. Short term interest rates have exceeded long term rates. This phenomenon occurs rarely in the markets. For newbies, it’s same as a bank offering a lower annual interest rate for a 2 year fixed deposit as compared to a 1 year fixed deposit. Surprisingly the long term rates being referred here is only limited to 2-4 years at the moment. The reason for worry is that the last 3 recessions were preceded by this phenomenon. Luckily, the inverse is not true i.e. every time this has happened, recession did not occur. It may be a good idea for those with extra cash to put it in some short term deposits.

Happy New Year!