Bloodbath nearing an end??????

I am writing this post minutes after the historic moment of Obama swearing ceremony. While to millions in USA and World, Obama has become a symbol of hope and optimism, but is the economic bloodbath nearing an end?????

Liquidity has vanished. RBS, Citi, UBS, Deutsche bank have all reported billions of losses in their quaterly results. Oil prices have fallen below $35 per barrel. There seems to be no hope from anywhere. Stock markets have failed to recover even after repeated stimulus and bailouts. Unemployement is soaring high not only in USA and UK, but many parts of the world including developing world.

But some analystes say worst will be over in next few months and economy will pick up in 2nd half of 2009. The logic being, the effects of the stimulus and bailout package will take time to show results. Plus investors are sitting on 70 % cash in USA which is all time high. Whenever stock markets have crashed in USA and cash pile of investors turned 55 - 60 %, there has been a rapid recovery. This time cash pile is 70 %, suggesting a revival in the capital markets in the USA. US capital market revival will give encouragement to capital markets elsewhere including India. A boom in capital markets means more IPO/FPO's resulting in easing of cash worries for most of the firms as money can then be raised through capital markets. Underwriting Investment Bankers will benefit and brokrage firms will benefit with the boom in capital markets. Effects will propagate and positive turnaround may be seen by the end of 2010.

Given Obama power to USA and World, things may change.