Preventing a meltdown
Across the world, all the central banks are pumping money into the economy and stock markets to avert a meltdown, except for those who have delinked themselves from the American capitalist system, eg the muslim states and Myanmar. What an irony. They are saved from a world system that is built on greed, exploitation and mismanagement by the Americans. And the Americans are pouring good money to chase after bad money, US$38 billion in the last few days to buy up bad sub prime mortages. When the fundamentals are wrong, it will go badly wrong. Spending and living on credit without thinking of repaying, or extending credit to unworthy customers, like our Ah Long, are awaiting a disaster of unimaginable proportion. The Ah Longs will find all ways to recover their loans. The Americans think that there is no need to recover these loans and will keep refinancing them over time, just like their trade deficits. Can it last? While the Americans were deceiving themselves into the sub prime mortgage industry, the bad thing is that they are exporting these poor credit risks to the rest of the world. Many unsuspecting countries and funds were lured into investing in such mortgages. And Murphy's Law was waiting to prove itself right anytime. Dow was down about 200 pts last night but managed to crawl back to lose only 31 pts. What a close call.