Hi Alchemist,

I came across the below article by George Soros.

Can you pen your thoughts on this?

The worst market crisis in 60 years.

http://www.ft.com/cms/s/0/1a7af090-c...077b07658.html

There is not much that I can add to it.

There is nothing much in this article that I disagree with.

I am more or less convinced that the USA's days of financial supremacy are over. There is only one way that the US economy can go from here and that is down.

After the Subprime bubble burst in August 2007, I have been constantly suggesting investors to stay away from stocks with exposure to US and other western economies.

I do not believe that this is a temporary problem and that US economy will revive in a few quarters.

From what I understand, this is just the beginning of the end of US as a financial superpower.

This is not something that was unexpected.

For many many years, economists, analysts and other observers had been warning about the bubble that US was getting into because of
-the easy availability of credit
-reckless lending; and
-mindless spending

in its economy.

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The ongoing credit crisis is nothing compared to what bigger problems wait for the US economy.

Read this article on US debt crisis from the cnn.com:

Also, take a look at the US Debt Clock - http://brillig.com/debt_clock/

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Please note: We are talking here of economic super-cycles.

This does not mean that the US GDP will halve in few quarters.

A super-cycle may have many quarters and even years of growth. Just that when the super-cycle's main trend is down, the quarters/years of recession are more severe and prolonged compared to quarters/years of growth.

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IT gets a shock?

As US cuts heavily on spending bcos of a recession, I assume that all exports to US will be hit to worst including IT.

Unless Indian service companies diversify they face a greater risk.

I guess IT job wont be as lucrative as before and also the downsizing might soon happen...

So people with high home loans have to rethink as a possible fall of real estate prices may occur in cities where prices skyrocketed.

Hard time ahead for the section of crowd who banked on IT? What could be the alternative if $1 = 33 INR(even lesser) by 2010(when some of these might have happnd)

It is true that Indian IT sector is not performing well from past few months due to US recession. But US recession is not going to stay for long. Market will go up once new government takes charge with new policies. And $ 1 = Rs 33, it is not going to happen. Because u have to accept the fact that most of the stocks in India are over valued, and thats why some people thinking that Sensex has reached new high because India is independent and growing. In this world of globalization, everyone is dependent on each other. If US goes in recession, we may also go, who knows. In short, I think that IT stock will go up after this recession.

Infosys is going at 15 times forward earnings in spite of growing earnings at 30%.

Markets have already discounted a recession.

It is more or less certain that US is going in a recession.

The only question is how severe will it be?

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