US Financial Crisis/Bailout, China's Role

Laugh don't get worked up over a possibility of what is going on. I'm not saying China has to grovel, or that China cannot win a war on China proper. I'm not saying it is a moral or logical thing to do. I'm saying it is a perspective to look at it, and it may be a motivation to do it.

Anyway, like Roger says, you can think of the loss in value as a protection fee. You can also think of it this way: most currencies have inflation. The figure of 15% in 5 years is a little less than 3% a year. I'm not sure if that is lowest around, but it's not terribly bad.

As someone that works in the financial area of New York, my views toward the current issue is that they are doing a lot of maneuvering so that it looks like they are standing by and trying to fix it. However, this really isn't going to solve anything in the long run. It will just add to the debt, make USD worth less by having too much cash with much slower manufacturing growth. What is American really producing? Nothing. That's what needs to happen or it will just be a continuous downward spiral for America.

Very few Americans realize how bad the situation really is. Paulson has no clue. Bernanke has no clue. They are trying to avoid another Great Depression, but this measure will just delay a large recession and create a larger recession down the road. People don't seem to understand that you have to balance budget, get rid of the excessive borrowing and reduce foreign commitments. People who advocate more military budget don't understand that America will collapse economically a lot faster than militarily. This country is headed for a smaller version of the Soviet collapse unless it addresses its economic situation. How do you explain an economy built on borrowing money from another country and making money on the margin that you larger to the people you lend it to? That's the real problem. Money flows out of the country and you have too much liquidity. Things are going to get more expensive, because USD is going to be worth nothing. Housing prices will come down and stock prices will come down, because it's going to be bid amongst Americans who are getting poorer and poorer from this. That's why it's so sad. People don't understand how bad this can get.

USD has lost 40% of its value since 2000.

Yep, 40%.

Eat that, China...

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I don't think its the bottom, no far from it. Unless I can see the prospectus, I'm not sure if Morgan Stanley or Goldman Sachs are sound institutions either. I can see a lot of SEC investigations in the future and US government intervention and regulation in the financial markets, so indeed the boom times maybe over for Wall Street.

A segment on tonight's 60 Minutes was shockingly interesting. Get a load of how much money is involved with this latest collapse. Key word... "latest."




It wasn't too long ago that the West was critical of China's finance sector to which something they accused China of not having was going to be the country's downfall which ironically should've been advice given to the US itself at the time. It's called "transparency." Apparently a greater developed finance system only means you have greater the problems. I'm sure the US will survive this but we're probably going to see a different world come out when it's over.

That's the "worthless paper" I mentioned posts ago. This is not a crisis centered and caused by bad housing prices. This is about worthless paper, from worthless bonds made of bad debt recycled into glamorous investments with fancy paper in fine print. This is about credit default swaps, which is basically an insurance bond without the financial resources to cover it.

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Its worthless and I will keep saying its worthless. I'm not sure if you read what others have described these financial instruments.

Let me put to you clearly okay? They took the baddest of the loans and mortgages, then repackaged them into "investment" and add some fine print to it. Buying to these financial companies means buying into these instruments, and you cannot fully account for what is inside these instruments without amounting to an investigation in the paper trail. In addition to that, is the credit default swaps, which is basically an insurance bailout without having the resources to back up that insurance because technically, they were not required so because they're called "swaps" not insured bonds. If they are insured bonds, the Feds would have required that the bonding company must have the resources to cover these bonds by law.

The housing crisis is just the tip of it and by far, doesn't even cover a teeny fraction of the full extent of the estimated 60 trillion placed in these questionable financial instruments and credit default swaps.

And maybe you have not heard the news but Treasuries are all going up.