Financial Meltdown: Recession!

I was made aware and am pretty much understand the power of economics in the America. Especially after recent times, that the price of crude oil shoots to USD140 and the sub-prime mortgage crisis that hit the Wall Street so damn badly. What else is more to talk about?

Everyone who has pass through the stages of recession in South East Asia during 1997 will recalled back those terrible times. Economic collapsed overnight, recession and unemployment, stagflagtation, monetary and local currencies is deem worthless at that particular time.

Malaysia, particularly, before that terrible time of 1997, was thriving on the bull run of economy. Almost everyone can blindly blindfolded pick any stocks in the market and make crazy money out of it. Then, came the crash. Everyone who is deemed brilliant then, was branded as greedy and stupid. Malaysians, in general, never really recovered from that recession. The bull that runs and rage in Malaysia fled elsewhere. China perhaps? This event, we called as 97, really teaches us to believe in ourself and look at the earth under your feet all the time. Always look at the downside, and normally, the upside will take care of itself, somehow.

The situation and crisis in America now is not of a HUGE surprise. Some economists and brilliant businessman has foresee this. Some brilliant analyst actually feel and know by instinct, that this crisis will come. It came hard. When banks start to offer funny campaigns to boost the figures and sales, while, making you hard to believe that they can actually making any money at all from the mortgage they offered, is the 1st sign of trouble. In addition, the risk-management is at mediocre, at best. Wall Street analyst and bankers wish to look good and look successful. Everyone is trying to boost that they can overcome the economy. Everyone thinks that they can be better than the Wall Street. The craze is there.

Then, fear comes. There are more supply than demand of houses in the market. Controls can no longer be applied to suppress the forces of fear of common men. As the oldest saying goes, man are driven by both greed and fear. Its true. Came the crash. Some so-called brilliant economists even dares to come out publicly and says that the recession is almost over! BS, IMHO! Everyday the economy looks gloomy, as the autumn comes. Banks is collapsing and declared bankrupt. How can this happen?

Now they are using the tax payers money to help and try to save the so-called, giant financial institutions. USD700 Billion to be exact, the American tax payers money. Lehman Brother declared bankrupt and Barclays took over them. AIG suffers substanstial losses and almost got wiped out clean. What happens?

I believe one of the problems, is back then when the bull is raging in American economy, the prices of home is simply, out-of-the-mind or CRAZY! A simple house by the highway 30 minutes to the nearest town in the middle of nowhere costs you USD1 million bucks. Can you believe it? But, the bankers look at the short term numbers to satisfy the shareholders and investors on the return of investments. Hence, they are blinded by the fact that HOUSES and property prices might be overvalued when it reaches certain craziness stage.

And now, American make decisions to use tax-payers money (good money) to throw after the bad money (losses suffered by American institutions) at the expense of American citizens. Can you believe it? Instead of making a better use of the money for the needy, like mid-class American, who are suffering due to bad credits, losses of employment and the ever rising inflation, they uses USD700 billion to rescue banks. Why? Important shareholders and important individuals holding their stocks la. What else?

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