FINANCIAL/ECONOMIC SITUATION IN THE WORLD

WOUTER VAN DER STOK

The idealised current global long wave

The Kondratieff long wave cycle 1949 - 2012

Source: http://www.marketoracle.co.uk/Article25663.html

USA

USA

USA Current account balance as a % of GDP

USA

CONSUMER LENDING CRISIS

The Cycle of Deflation

Source: http://www.marketoracle.co.uk/Article26039.html

Source: http://www.marketoracle.co.uk/Article26039.html

Total Spending US from FY 1900 to FY 2010

Top Holders of US Debt ($BN)

Source: http://www.marketoracle.co.uk/Article26195.html

Source: http://www.marketoracle.co.uk/Article26195.html

POSSIBLE SOLUTIONS Medium term

- Review and simplify international accounting rules on financial reporting: “fair value” versus “mark-to-market”.

- Ensure originators retain the riskiest part of securitized loans.

- Enforce prime brokers to stop lending to hedge funds which fail to disclose audited balance sheets.

POSSIBLE SOLUTIONS

- Arrange to bring trading of derivatives onto exchanges for safety (even if costs go up).

- Re-introduce some aspects of the old Glass-Steagall Act to separate commercial banking from capital market activities.

- Improve financial literacy of general public to reduce financial misrepresentation, greed, fear and ignorance of risks.

THANK YOU