Friday, February 13, 2009

Confidence Is More Important Than Gold Now

The world economy is dwindling down at an alarming pace. Rich nations and developing economies alike, economic growth is contracting fast, driving people from top to bottom phobic.

Britain's economy is likely to shrink 2.5% this year. A member of of G7 ( the so-called rich men's club), Britain is really heading for deep recession. The Governor of Bank of England (the central bank) Mervyn King said recently that the Bank will launcha policy of "quantitative easing" (meaning to print a lot of money).

This nature of gloomy news is non-stop nowadays. It is truly hard for investors to stay firm in confidence facing the depressing outlook. And investor confidence is so crucial these days that, without which, a sinking economy would not revive.

As Wen Jiabo put it recently in an interview with Financial Times, "confidence is the most important thing, more important than gold or currency".

With uncertainties abound now about how quickly the various measures taken by the authorities around the world - banking rescues, fiscal stimulus packages, interest rate cuts and printing money- would work, what would you expect investors to do - dump money into a sea of uncertainties?

No comments: