Red-letter month

Russians have such saying: The way you see the New Year in so you will live the whole year. Having reflected on this in the beginning of 2008 we can start fearing for the sinister meaning of this proverb as we have see this New Year in with new oil prices resulted by the fever at trade sites of the United States. And again there is a limit and this limit has exceeded 100 dollars per barrel. State of affairs caused the inflation of dollar and hence the decrease in costs for companies at world sites that resulted in reduce of rates at world stockmarkets. Analysts have already christened post-new year events with first wave of world economic crisis.

The second wave was the event of January 21 when red came to the monitors of the whole world and sprinkled all stockmarket indices. In the early morning traders of the planet were woken by crashed japan index Nikkei that had lost in weight -3, 86% and set a minus record for 2 years. Having drawn all other Asian sites this Japan dragon dropped even the Russian market to mire than 7% that day. And though Russian investors were saved by a miracle and РТС added more than 5 percent on the 24th and more than 2 percent on the 25th of January. In any event all external preconditions argue for the coming of bull trend.

Strictly speaking, the events of the week from January 21 to 25 more and more start to remind the shocking news from New-York that in 1929 had overturned the leading world economics like a hurricane and as a chain reaction had plunged the national economics into a deep crisis and into the Great Depression in general. That October due to the crash of Wall Street the USA had lost 30 billion dollars that is even more than the government had spent for the whole World War I. During that far 5 days started from October 24 to 29 the indexes had rapidly swooped down without leaving any opportunity to the world economists to collect themselves and crashed the stocks having lessened their value.

The first reaction to the surrounding was a panic decrease of refinancing rate by FSA. The artificial decrease of this rate for 3/4 percent, i.e. decrease to 3,5% is a howl of Bernanke from the sinking ship of US economy. Such scaled decrease of the rates was aimed to prevent the recession in the USA and to make money more available at the market which gives an opportunity to investors to buy the stocks for the cheap money and to restart the complicated mechanism of stock market trade and growth of economy in USA and in the world.

The next reaction was the announcement of a number of companies about their losses. The most shocking was from The Bank of America establishing the fact that company ha already lost about 95% of the profit that was planned to earn in 2008.

That’s why it would be better to wait a little with inexchange and outexchange of large amounts as volatility of US dollar arte can cause significant losses.

Crisis shadow on virtual economy

And what meaning does it have for virtual economy?

Firstly, the decrease of FSA rate will spur on the interest to dollar and this may result in slight growth of its cost in comparison with other currencies. But this buoyancy in dollar rate seems possible only in the short-term prospect as there is almost no single factor that promotes the strengthening of American currency.

Secondly, such shocks in world economy will result in unprecedented growth of gold costs which on the January 28, 2008 have already hit the record of 927 $\oz. And if the situation with drops in rates for American indices continues we can expect even a higher growth of gold prices at world stockmarkets, and hence the development of virtual economy in the fields of DGC.

Of course, from the macroeconomic point of view the crisis that is observed today can cause the consumption decrease in the USA and in the world, and this will certainly result in e-currency demand decrease. But the economy of the USA is not so weak to give up in the face of coming recession. Besides, the developing markets of Asia, South America, Eastern Europe and Russia can support virtual economy due to the rapid increase of interest to e-finances in these countries.

Somehow or other, DGC industry gets profit in any course of development of the events and this will allow people to save their money in gold equivalents even in case of the worst economic scenarios. And they can do this without moving away from the computer. The population of USA had not such an opportunity in 1929 and may be that’s why many people who failed to buy gold had declared themselves bankrupt. And today such opportunity exists and may be one day in the course of history will be written that the coming world crisis had been avoided due to virtual economy and in particular due to its DGC tools.

Artur Salnikov, financial analyst of «Trainex Sevice Ltd»

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