Dear Dali,
"There is nothing you cannot save if you throw enough money at it."
I really can't believe you say this! It's more than stock market.It's more of the fundamental of the economy itself. an economy of a nation can't be saved by just printing money and pump it in the system. It is much more complicated than that.
Yesterday i sent you the youtube link of what peter schiff is saying but look like you ignore it!
Yesterday was 18 september 2008, exactly one year anniversary of the first rate cut(50 basis point) by federal reserve and look what happen, at least 5 companies about to bankrupt! and economy is sinking to hell!!!
You may say if fed didn't intervene it would be worse, well, if fed didn't intervene in the first place, the us economy would be much better. They created the dot com bubble and it burst in 2001. Then to "stimulus" the economy fed(led by Greenspan) encourage US people to spend money and cut the interest rate all the way til 1.00% and created the housing and credit card bubble(about to burst). Now the housing bubble is bursting and fed inject even more money! They repeated the mistake they done in 2001 by creating more and bigger economy bubble. The last thing you wanna do when you in a hole is dig deeper and that's exactly what the fed is doing.
This is what gonna happen to US if they keep doing the same thing:Their inflation rate will shoot up as the money supply increased heavily.(yesterday gold price up 80 dollar per ounce is the prove), their dollar will depreciate and their debt will be so huge they won't be there to control the world economy(US change from the world biggest creditor in the '70s to the world biggest debtor now) and by that time, the economy of the world will collapse just like what happen to the great depression 1929.
Well just give you a taste of what gonna happen. You can ignore me again Dali but that is gonna happen. Like the MasterCard ad we use to watch on TV: there are really something money can't buy and that's sound economy that the US and rest of the world really need!
So you might ask how? how to save the economy now? First fed should stop acting like this. Let the economy recover itself. The economy have to take the painful medicine to cure and heal itself. Let all the bubble created by the fed and people of America burst and start all over again. It is the only way like it or not.
Good Luck!
4 comments:
HI. I agreed with you. MONEY could not BUY out US economics. Do you think Malaysia will be facing bad recession by next year?
TEH
I think US already is in the recession if it's not because of outrageous consumer spending of the American and the scary part is American spend money they don't own(credit card, borrowing).
As we know recession means negative growth of GDP for two straights quarters. Meanwhile largest component of GDP is consumer spending.
So here are two cases that gonna happen to USA from now til maybe 2 years in the future:
1)US consumer continue to borrow money and use their credit card til their debt is so huge and can't pay back. Although the US gdp growth will continue to stay on the positive side, US economy will soon become like Bolivia's or Argentina's. Also inflation rate gonna skyrocket.
2)US consumer finally realize they are wrong and stop borrowing money. Although it will make the gdp growth become negative and possible recession, it's the right thing to do. This is the only way people of America can save their economy. They can't listen to Federal Reserve or Treasury department because these two agencies only care to maintain the stability of stock market, not the economy. Also these two department have to protect the largest investor of some rubbish America company such as AIG, MS, GS and other financial institutions.
Government of China, Singapore, Russia, India, Japan and other countries own a high stake in these companies and also the us treasury note.
So i can't say for sure will US fall into recession technically but i can assure you, if government of US continue to print and pump in money and bailout rubbish company, the US economy will go deeper that what happen during the great depression 1929.
Relatively for me, US already in recession!
Thx for your response. The huge impact of US economics towards the world, particularly in Malaysia. So, we are expecting recession all over. Inflation is at high level here and interest rate may jump up pretty soon, i think. Situation worsen but is there any light into this dark tunnel?
Thanks again for your input.
TEH
Dear CP:
Asia is mostly fine because we are self sufficient. I am still bullish on China, HK, Singapore and other emerging market.
People tend to believe in a wrong economy theory: they think if US economy sink down the toilet, the whole world will follow just like what happen to Asian during the great depression 1929.
However great depression 2008 isn't the same as in 29 because we are way less defendant to US.
We all know GDP consist of 3 components: private spending(household consumption and private investment), Public spending and income from trading(net export: export minus import).
The portion of net export to GDP become smaller and smaller for Asia countries. Never forget this: if US economy sink, we will loss our income from export but we will also benefit from smaller import from the US. So the damage is relatively smaller.
So when US economy sink mainly because they don't understand what is economy, we, the emerging market will take over the world. Same happen like the 1800s as when economy of most European countries suffered a slow down, US took over the world!
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