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.


Anonymous said...

America is in deep shit and they are just trying to put on a bold front. Hugh deficits, hugh foreign debts, people used to spending on credit with no savings. The whole world is helping to support the American lifestyle. It is now coming apart.

Anonymous said...

Many Chinese analysts have already predicted a gradual downplay of the US economic might at the pacific century where the baton is handed back to where it has belonged for past millenniums. Unfortunate to the US these are zero sum game things; something has to give and we feel bad to see the sharp decline in American lifestyle following this great wealth transfer.

We are sad to see them go.

Anonymous said...

Read Mike Whitney's article on Aug 7 in www.smirkingchimp.com.

Matilah_Singapura said...

The worst thing to do is to pump more money (currency) into the system.

The system is cracking because of too much created money (i.e. increase in the money supply). Pumping in more is like giving someone with cancer more cancer cells.

Benanke is obsessively fixated to not allow deflation to occur, and so he pumps, everyone pumps.

To both anonymouses: In as much as the US is in deep shit, we will not see a demise of American might and world dominance anytime soon. There are many reasons for this, but mainly the fact that the amount of wealth locked up in the capital structure is ENORMOUS.

redbean said...

leave it to the american financial geniuses to solve their own problems. nice to watch.