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How Long Will the Financial Crisis Still Last? (3)

Here we go again with one more survey on how long might still last the current financial crisis / recession. Compared to the last two surveys we had a couple of months ago, this one seems to be pretty more optimistic. This optimism is fueled by the recent slow recovery of the stock markets (see the Dow Jones recovering sharply in the last two weeks), as well as by the pace of the bad news pouring in at a slower pace.
The financial investing experts surveyed by point out at four main causes of their optimism:
– we exit the “all financial institutions are bankrupt” thinking mode;
– several banks are trying to exist the government bailout schemes (or escape the bankrupcy) with prety aggressive measures, which might show whether they can be successful in the future (or not);
– accounting standards, especially the International Financial Reporting Standards (IFRS) and the US GAAP have been adjusted towards a more relaxed measurement of the financial institutions assets (allowing them the famous “mark to market” accounting possibility, which allows the transfer of their massive decline in values to their balance sheets);
– and at last, but not at least, the buying in of the G20 nations to buy out the toxic assets, which now is going to be executed.

Other surveyed investing experts point out to the fact that the economy seems to have reached a bottom in terms of recession indicators. This means, on one hand, that the assets (shares, buidlings, real estate, commodities, raw materials etc) are so depressed, that the urge to buy them before they start to rise again in prices becomes hard to resist. On the other hand, other experts point to the fact that it is wise to start up your business now, when the competition is weak and few have resources to enter new markets. This early entrance strategy might secure an improve competitive position, help from the US government in terms of various subsidies and a boost to the performance of the overall economy. To quote some experts: “In a down economy, EVERYTHING is on sale: talent, office space, goods and services. With proper planning and funding, I think it’s a great time to start a business. Economic downturns tend to produce a lot of innovation and new enterprise. ”

Other experts show that cutting investments any further, after layoffs and freezing the assets, might seriously reduce the future competitiveness of the companies. The companies are on the market to make profits and to grow, not to downsize continuously – and again it seems that most of them have reached to bottom end of their plight.

Overall, the experts opinions suggest that the turnaround of the US and G20 economies should be around the corner. If the corner means 3 months, 6 months or one year, it still remains to be seen…

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