Market Trend Analysis - Double Dip A Reality?

In 2008, the housing bubble in US triggered a worldwide financial melt down. The toxic financial derivatives has cause financial institutions all over the world to lose trillions of dollars in total. Many companies went bust and some large companies went into trouble.

In 2011, what is facing us is the sovereign default. With toxic "Assets" (if they are really assets) being taken into US Fed, the US banks are now operating as normal. However, that has not generated much changes to the fundamentals. US and Europe still operates under the same mechanism. Borrow money, spend to generate demand and growth. There is no change in fundamental of operations. There is no intention to change. Again this would certainly generate another bubble. The borrow and spend first and then pay later (if there is some spare cash) strategy is going to go on. Of course everybody is hoping this would go on forever. Even if it does not, it would be the next generation's problem.

Looking at the situation in Eurozone, I am tempted to think that we must wait for at least one country to default in order to see some fundamental shift in the methods of tackling the problem. It would really take some major events to make people realise that spending future money is not sustainable in the long term. The UK is smart not to join the Eurozone. Now the Germans must be regretting. Imagine trying to convince a hard working, thrifty person to lend money to a lazy person who refuse to work but wanted to live a more luxurious life! You must be treating the hardworking person like an idiot in order to come up with that idea.

Bailing out cannot go on forever. It is not sustainable. The Greeks must have a concrete plan to bring themselves out of the debt loop. This is like drug addiction. Only drastic, fundamental changes to the economic structure can bring them away from such addiction. And for that to happen, some pain has to be inflicted or else they would never wake up. So, the default is given. It is a matter of time. And it should be soon.