The Herald Bulletin

Morning Update


January 31, 2014

'Big Joe' Clark: Changing world markets may impact investors' appetites

The process of eating appears rather simple when you break it down to those three steps: cooking, eating, and digesting.

Most of us would choose to overlook the digestion portion of the process but it’s a critical component. In fact, it’s the most critical, as that is where the nutrients come from that fuel your body.

Growing an economy is a little more complex, but there are still critical cycles. The better we understand the cycles, the better we can determine what we expect to have happen in the future.

The emerging markets — think Brazil, India, Russia and China — made up less than 30 percent of the world’s GDP in the 1990’s. The Wall Street Journal reported that they represent more than 50 percent of the world’s GDP in most recent years. That is a mind boggling growth rate but where did all the “nutrition” come from to help them grow so rapidly? The answer is a cycle that allowed for massive inflows of capital in the form of leverage or borrowing money.

The emerging markets were built on debt and the question for the world economy will be whether they can survive based on what they built because the lending has run its course. At least for now.

The past economic cycle, both domestic and abroad, was based on having access to cash. The world grew, the economies got stronger and prices rose until the global financial crisis in 2008. The merry-go-round came to a sudden stop. Now, access to credit isn’t as easy for the emerging market countries. China has a huge banking problem, wage-inflation is out of control and there are more questions than answers with the second-largest economy in the world. India is in financial turmoil, and Russia’s hosting of the upcoming Olympics presents security risks that concern the world.

Text Only
Featured Ads
More Resources from The Herald Bulletin
AP Video
Raw: Air Algerie Flight 5017 Wreckage Virginia Governor Tours Tornado Aftermath Judge Faces Heat Over Offer to Help Migrant Kids Kerry: No Deal Yet on 7-Day Gaza Truce Kangaroo Goes Missing in Oklahoma More M17 Bodies Return, Sanctions on Russia Grow Gaza Residents Mourn Dead Amid Airstrikes Raw: Deadly Tornado Hits Virginia Campground Ohio State Marching Band Chief Fired After Probe Raw: Big Rig Stuck in Illinois Swamp Cumberbatch Brings 'Penguins' to Comic-Con Raw: Air Algerie Crash Site in Mali Power to Be Restored After Wash. Wildfire Crashed Air Algerie Plane Found in Mali Israel Mulls Ceasefire Amid Gaza Offensive In Case of Fire, Oxygen Masks for Pets Mobile App Gives Tour of Battle of Atlanta Sites

Click HERE to read all your Parade favorites including Hollywood Wire, Celebrity interviews and photo galleries, Food recipes and cooking tips, Games and lots more.
Hyperlocal Search
Premier Guide
Find a business

Walking Fingers
Maps, Menus, Store hours, Coupons, and more...
Premier Guide
Helium debate
Front page

Do you think Madison County and its cities need stricter pet ownership laws?

Yes, animal abuse is rampant in our area and something needs to be done.
Yes, but it may not help. It’s difficult to enforce such laws.
No, the laws are fine as they are.
Not sure
     View Results