Is Second double dip coming ?

By John Smith Jan 07 2010

With economy looking all rosy most people say this is the most ridiculous question to ask right now. However deep inside the boom another crises is brewing. Most financial firms these days are originating loans and selling them to government agencies . About a third of these loans are insured but mortgage insurance companies like Radian, PMI and  Genworth.
 
However with recent downgrades of these firms by S&P the danger of mortgages bringing a second dip in this recession might come true. These companies currently take on billions of dollars of credit risk. However if you believe the rating agencies the probability of these companies becoming bankrupt is much real today. If this happens we would see a whole new set of defaults happening and this means new losses for the financial sector.
 
Because of massive support of the government the financial sector in US has been able to come out of the crises but it is still weak. It does not have the capability of facing a complete new set of losses put forth by failures of these firms. 
 
So from the desk of Compare broker analyst we recommend staying away from investing in financial sector currently. On the other hand we believe investing in manufacturing makes much more sense. The reasons being manufacturing indexes looking up showing signs of growth, with high unemployment workers are available at low rates for manufacturing firma as well as high government spending in road construction and infrastructure development throughout the world/. Manufacturing is going to be the next blue chip for 2010.\

Recommended articles :

http://www.comparebroker.com/us_economy_recession_aftereffects.php

http://www.comparebroker.com/housing_market_future.php