November 4, 2012

World Economic Outlook

IMF Logo
The presidential election is coming up this Tuesday and the world is fixed on the results of the election.  Whether it be Obama/Biden or Romney/Ryan doesn't matter...because there's a lot of work to be done and no one man will be able to change the economic outlook for the US or the global economy.  The International Monetary Fund (IMF) just released its assessment of the global economy and identified two critical issues that could effect the recovery of the global economy.  The euro-zone crisis and the "fiscal cliff" threat faced by Europe and United States, respectively.

Europe needs to contain its money woes and increase stability for its currency.  The country is experiencing "capital flight" where the money is leaving the country in search of a safe haven.  Normally, the United States would be a sure safe haven but we also are experiencing our own woes in the form of pending tax increases, raising the debt ceiling (for about the 11th time in 8yrs), and automatic spending cuts.  The United States has raised its debt ceiling for over 140 times since 1940 - Office of Management and Budget.

The World Economic Outlook report can be found here: http://www.imf.org/external/pubs/ft/weo/2012/02/index.htm

The IMF expects advanced economies to grow at least 2% - which the US has done, but unfortunately most of America's growth is due to government spending on mostly military goods/services.  Which is somewhat interesting since the spending has been done right before an election year.  Nevertheless, unemployment remains high and companies continue to hoard cash due to uncertainty running amok in the marketplace.

A Solution for You:
There is a way for you to take advantage of this situation for your own benefit.  Invest in commodities such as oil and agriculture products.  Investing in commodities is how you can make some money no matter who's elected or if the economy turns up for the better or turns down for the worse.

If the economy gets worse, central banks will print even more money trying to stabilize the global economy...the result of their printing will devalue the currency and cause prices to increase.  When prices increase your investments increase.  If the economy gets better, then the increase in demand for commodities will increase as people will have more money to spend and corporations will need to use more resources for expansion.



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