正文
about 6 months ago, when the spec fever was still rampant here, and everyone talking about how to max leverage on real estate market, I wrote a few small pieces with the effect of "cooling water",
(http://web.wenxuecity.com/BBSView.php?SubID=tzlc&MsgID=7141)
then came the sub prime bomb,
now, when many are looking at the gigantic shadow of the ARM resetting starting this Sep and say, "doomed", I second here to divident_growth that, no, we are not,
pain? yes; log of pain? probably; fatal? no,
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first, again similar to divident_growth's thinking, where we are in the downtrend? We are two years from the peak, yes that roughly put us in the 1990 after the last real estate frenzy,
how history repeats itself, we are also seeing the end to another Bush's term getting close, by day, with a new President, hopefully we will see less of burning US dollars in destruction, and more in production,
that leads to the second questions, what is the essence of the current crisis?
the real issue of the crisis is, despite of all the headline news of Iraq and subprime and oil, is that US, at a whole, has been degraded into an economy entity that consumes more than it produces,
history has not been kind to any such entities, they inevitably went downhill...
unless, unless it can find a way to re-invent itself,
can US manage to do that? No one knows for sure. But US has had such a track record, it's hard to bet against it.
third, what's easy to bet against, is not US, but USD. USD the currency.
here the Fed comes into the picture. There are two of the most important financial lessons we learned in the last century. The "New Deal" that pulled US out of the great depression, and the deflation in Japan. Fed has learned to better smooth the curves, both pre and post bubble. Fed can not buy a solution, but it will buy everyone time... It's a defeatist way to think that nothing can be or will be done, and defeatism has never won at the end of day, throughout human's history.
after all the survival efforts, people and economy will find ways to adjust, and go on, but USD will likely be an easy victim.
fourth, the ultimate reason to stay optimistic is that, the world, as the whole, is at the greatest and most productive period of all time. It's not the end of world that a few over-spent beyond their means, the solution can be as trivial as to give them a few years to build up enough saving to get out of the hole. If you can look beyond a couple of years and a few areas, why would you get bearish at this point of time when human beings are at their historical best in producing wealth?
(http://web.wenxuecity.com/BBSView.php?SubID=tzlc&MsgID=7141)
then came the sub prime bomb,
now, when many are looking at the gigantic shadow of the ARM resetting starting this Sep and say, "doomed", I second here to divident_growth that, no, we are not,
pain? yes; log of pain? probably; fatal? no,
---------------------------------------------------------
first, again similar to divident_growth's thinking, where we are in the downtrend? We are two years from the peak, yes that roughly put us in the 1990 after the last real estate frenzy,
how history repeats itself, we are also seeing the end to another Bush's term getting close, by day, with a new President, hopefully we will see less of burning US dollars in destruction, and more in production,
that leads to the second questions, what is the essence of the current crisis?
the real issue of the crisis is, despite of all the headline news of Iraq and subprime and oil, is that US, at a whole, has been degraded into an economy entity that consumes more than it produces,
history has not been kind to any such entities, they inevitably went downhill...
unless, unless it can find a way to re-invent itself,
can US manage to do that? No one knows for sure. But US has had such a track record, it's hard to bet against it.
third, what's easy to bet against, is not US, but USD. USD the currency.
here the Fed comes into the picture. There are two of the most important financial lessons we learned in the last century. The "New Deal" that pulled US out of the great depression, and the deflation in Japan. Fed has learned to better smooth the curves, both pre and post bubble. Fed can not buy a solution, but it will buy everyone time... It's a defeatist way to think that nothing can be or will be done, and defeatism has never won at the end of day, throughout human's history.
after all the survival efforts, people and economy will find ways to adjust, and go on, but USD will likely be an easy victim.
fourth, the ultimate reason to stay optimistic is that, the world, as the whole, is at the greatest and most productive period of all time. It's not the end of world that a few over-spent beyond their means, the solution can be as trivial as to give them a few years to build up enough saving to get out of the hole. If you can look beyond a couple of years and a few areas, why would you get bearish at this point of time when human beings are at their historical best in producing wealth?
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