marketmaker's blog

There has been a somewhat foolish sentiment of optimism on Wall Street. The fact that the economy in general has showed signs of recovery, has lead many from the hapless financial industry to revive the sweet memory of the pre-recession times. The major banks' ability, boosted by the stimulus and the many other shots in the arm from the government, to re-pay the TARP funds has further strengthened this sentiment.

Yet, it may be to soon to plan, let alone, start enjoying a comeback of the investment banking, stocks and financial growth as we knew and enjoyed it in 2004-2007.

A British business organization -  The British Chambers of Commerce - recently declared that - THE worst of the UK recession is over. This may sound a bit too optimistic to the 2mln. plus unemployed in the UK.

The news from the Eurozone today cannot sound good to any economist. For the first time since the euro's introduction the Eurostat has registered, albeit token deflation. To the regular person deflation does not sound as bad as inflation. Actually the idea that things would be cheaper tomorrow than they were today is not that bad.

There is however a significant downside - deflation means that the economy is losing it's single most important engine for growth- entrepreneurship. The need and want to invest, produce and ultimately increase your own wealth.

This is not really a proven fact or a general rule, but a very defendable hypothesis. Indeed it's during times when one has to summon all means and powers, when some very bright ideas are conceived.

If you'd like to start small however here is a brilliant article about salary negotiation and game theory . The highlights:

If you are first to mention a number, you are a loser.

The church has done it for millennia, but now there is a new player in the game - Sony Pictures. For centuries our forefathers have received constant warning of the Doomsday by the clergy. To have any chance to go through the second coming you had to follow an awful lot of rules and above all do penance - at some point purely financial.

Some of the strongest arguments presented against the stimulus and the increased government spending to tackle the credit crunch is the bulging US deficits which further indebts the government.

While true, this should not be regarded as fatalistically as it is. The simple fact of life is that for one reason or another the global economy relies on this debt. You can think of the financial flows from the west to Asia and the returning flows of goods and exports from Asia as a ocean current.

Iran has been in the news recently. The controversial election result - proven by statistics in a  Washington Post  Article to be far less than realistically probable - sparked unseen public demonstrations and clashed with authorities.

The stimulus and quantative easing seem to be bearing some fruits. The result of the stimulus however will not be obvious to the consumer and small business for some time to come. An interesting chart however shows the clear uptick in the PMI (purchasing managers index) in the US and Eurozone. It is optimistically crawling back to neutral territory.

Much has been made recently of the flat world idea as a form of new holistic humanism. The flat world idea suggests that globalization and inter-connectivity will mean that instead of the traditional hierarchical structures of society, soon we'll be living in a flat, egalitarian world.

It seems to me some people just do not get it. In the free environment of the Internet great innovation does not happen in some secret labs hidden under  the huge corporate R&D complexes.

All of the wonders of the Internet - Wikipedia, Google, Facebook, Google Maps, Second Life, the whole Blogosphere Twitter .. and many other wonderful services - were not invented by an evil "chair-throwing" corporate genius.