- Written by Paul
The rumors of a fundamentally strong economy have been greatly exaggerated. The economy status remains at brown alert, indicating that the economy remains substantially screwed up. Even the US White House now claims that the economy still has 'strong' underpinnings. Why is that?
People have a basic need to see some good, even when we are at the darkest hour. There is a need to see the light at the end of the tunnel. And they say that the light is darkest just before the dawn, in this case a dawn of a newer and stronger economy.
But what if this is not the darkest time? It could be only the beginning. And what if that light you think you see down the tunnel is an oncoming train? We could be heading for an even bigger train wreck, and we are fresh out of band aids. By the way we predict a rush on band aids and other first aid supplies, so better stock up on them today.
Nobody likes to be told "We're all going to die!"
But just a week ago, White House Office of Management and Budget director Peter Orszag declared that "fundamentally, the economy is weak." So who are we to believe?
There is little solid evidence to suggest that an end is anywhere sight to the severe recession. So we remain at brown alert. The economic status in Iceland is not improving. Inflation is in double-digit numbers, unemployment is on the rise and the currency, the Icelandic Krona, has fallen to historical lows (it's in the toilet). If you visit Reykjavik and ask any people if the economy is 'fundamentally strong', they will laugh at you.
So we are nowhere near out of the tunnel, and if you see a light ahead I would advise to get out of the way, because it is not the exit.