The US Government key lawmakers gave the greenlight to the huge financial bailout to the current credit crisis, where many large banks and institutions face collapse or take over.
While many countries corperatized financial institutions, America is nationalizing their banks by pumping in money via warrants or takeovers, to prevent a major recession or even leading the global economy into a Great Depression.
The question in mind is, "What if the bailout fails?". What other contigency plans does the US Government have in mind?
At the same time with the worst financial clot in the US, melamine was found in many milk products in China. Melamine cause kidney stones and have lead to many deaths in infants. Most countries have recalled milk products after milk products off the shelves.
The scare will affect almost all milk based products from China. At the same time, consumers have also avoided other food products from China. This will lead to lost of export to China's producers. The lost of export market leads to job lost and closure of companies.
Would this create another set of problem for the world? Afterall, China being the most populous nation in the world and having one of the largest GDP, this scare can lead to a new set of problem.
Monday, September 29, 2008
Monday, September 22, 2008
The US$700 Billion Bailout, or Quick Fix
The Bush Administration has pledge US$700 billion rescue plan to prevent a economical collapse from failing financial institutions. Where is the money coming from?
The US is heavily in debt, they spent tens of billions a year in the Iraq war. Over the years, the US Reserve has plunge deeper into debts. They will need Tresury Bills to be issued and having other countries to buy into the Tresury Bills. The future generations of America will be caught paying for this rescue plan.
It is obvious Tax Payers will bear the blunt of the bill from the mistakes of the leaders (be it government or economy). This quick fix can leave a slightly positive legacy for George Bush as he departs the White House in a few months. But the next President will be the one introducing higher tax.
Rather than making the people pay for the mistake created by others, the government could have opt to make the 'creator' pay for it. The Inland Revenue Service (IRS) could look at the top income earners of these 'creators' and have them pay the repair bills. If the IRS targets the top 10,000 earners (of the 'creators'), taxing each one of them a range of $1 million to $50 million (top earners of the 'creators' were making $100 million a year then). If the average amount works out to $20 million each, that would raise $200 billion. Work up the ladder to raise more money.
Afterall, since the 'creators' reaped from the spoils, and created ruins in the economy it is in now, they should be liable to pay for their mistakes. Even if half of these 'creators' goes bankrupt, it saves 20 million people in America, and countless millions globally and the global economy.
The US is heavily in debt, they spent tens of billions a year in the Iraq war. Over the years, the US Reserve has plunge deeper into debts. They will need Tresury Bills to be issued and having other countries to buy into the Tresury Bills. The future generations of America will be caught paying for this rescue plan.
It is obvious Tax Payers will bear the blunt of the bill from the mistakes of the leaders (be it government or economy). This quick fix can leave a slightly positive legacy for George Bush as he departs the White House in a few months. But the next President will be the one introducing higher tax.
Rather than making the people pay for the mistake created by others, the government could have opt to make the 'creator' pay for it. The Inland Revenue Service (IRS) could look at the top income earners of these 'creators' and have them pay the repair bills. If the IRS targets the top 10,000 earners (of the 'creators'), taxing each one of them a range of $1 million to $50 million (top earners of the 'creators' were making $100 million a year then). If the average amount works out to $20 million each, that would raise $200 billion. Work up the ladder to raise more money.
Afterall, since the 'creators' reaped from the spoils, and created ruins in the economy it is in now, they should be liable to pay for their mistakes. Even if half of these 'creators' goes bankrupt, it saves 20 million people in America, and countless millions globally and the global economy.
Tuesday, September 16, 2008
Slowdown in Singapore Economy
The US Financial Crisis and it's effect on global economy caused market slowdown and turmoil. Joblessness has risen to 2.3 percent in the second quarter ending June 08. Jobless rate grew two quarters in a row.
Some 77,800 residents were jobless in June. The seasonally adjusted figure was 60,900, up 12 per cent from 54,300 in March. But MOM said it was comparable to the 59,700 in June a year ago.
But the labour market remained strong. A record 144,600 jobs were added in the first six months, compared with 113,800 in the same period last year. But the growth of 71,400 jobs was slightly lower than the first quarter's 73,200. Still, it was higher than a year ago (64,400).
Driven by robust building activities, employment in construction rose by a record 22,400 in the second quarter. But growth in the other sectors has moderated from the previous quarter.
(source : http://www.straitstimes.com/Breaking+News/Singapore/Story/STIStory_278742.html)
The growth are largely seen in construction industry, which is largely occupied by foreigners. This does not truly reflect jobs for Singaporeans. Foreigners who became jobless, will be send back or leave Singapore. Thus, the unemployment rate are mainly Singaporeans as a whole.
Further to the uncertain economic situation, private home sales in Singapore slumped 81 percent in August from a year ago, to the lowest level since March as a combination of global financial turmoil and a traditionally unlucky month spooked buyers.
Sales of new residential projects, comprising both houses and apartments, fell to 320 units from 1,723 units sold in August last year, and sales were also down 64 percent from the 901 units taken up in July 2008, government data showed on Monday.
Singapore's financial services and export-dependent manufacturing sectors could be hit by global financial turmoil, with U.S. investment bank Lehman Brothers filing for bankruptcy protection on Monday .
Worries over Singapore's economic outlook have ended a four-year housing boom in the city-state, as price growth for private homes slowed sharply in the April-June period, rising just 0.2 percent in the quarter.
Concerns about the health of Singapore's property sector has prompted analysts to slash share price targets for developers such as CapitaLand, Keppel Land and City Developments.
(Source : http://sg.news.yahoo.com/rtrs/20080915/tap-singapore-property-c3bb44c.html)
From the economic uncertainty and weaken consumer confidence, chances are, property prices will drop in the coming months.
Some 77,800 residents were jobless in June. The seasonally adjusted figure was 60,900, up 12 per cent from 54,300 in March. But MOM said it was comparable to the 59,700 in June a year ago.
But the labour market remained strong. A record 144,600 jobs were added in the first six months, compared with 113,800 in the same period last year. But the growth of 71,400 jobs was slightly lower than the first quarter's 73,200. Still, it was higher than a year ago (64,400).
Driven by robust building activities, employment in construction rose by a record 22,400 in the second quarter. But growth in the other sectors has moderated from the previous quarter.
(source : http://www.straitstimes.com/Breaking+News/Singapore/Story/STIStory_278742.html)
The growth are largely seen in construction industry, which is largely occupied by foreigners. This does not truly reflect jobs for Singaporeans. Foreigners who became jobless, will be send back or leave Singapore. Thus, the unemployment rate are mainly Singaporeans as a whole.
Further to the uncertain economic situation, private home sales in Singapore slumped 81 percent in August from a year ago, to the lowest level since March as a combination of global financial turmoil and a traditionally unlucky month spooked buyers.
Sales of new residential projects, comprising both houses and apartments, fell to 320 units from 1,723 units sold in August last year, and sales were also down 64 percent from the 901 units taken up in July 2008, government data showed on Monday.
Singapore's financial services and export-dependent manufacturing sectors could be hit by global financial turmoil, with U.S. investment bank Lehman Brothers filing for bankruptcy protection on Monday .
Worries over Singapore's economic outlook have ended a four-year housing boom in the city-state, as price growth for private homes slowed sharply in the April-June period, rising just 0.2 percent in the quarter.
Concerns about the health of Singapore's property sector has prompted analysts to slash share price targets for developers such as CapitaLand, Keppel Land and City Developments.
(Source : http://sg.news.yahoo.com/rtrs/20080915/tap-singapore-property-c3bb44c.html)
From the economic uncertainty and weaken consumer confidence, chances are, property prices will drop in the coming months.
US in 'once-in-a-century' financial crisis
It appears the worst of the US Credit Crisis is unvealing more turmoil. The US government have done a bailout for Freddie Mac and Fannie Mae, while Lehman Brothers have filed for bankrupcy.
Bank of America has agreed to buy Merrill Lynch for US$50 billion. Singapore's Temasek Holdings owns about 13 to 14 percent in the US investment bank, with a total investment of US$8.3 billion.
There is high possibility that more major financial institutions will fall. What is still unknown?
Former Federal Reserve chief Alan Greenspan said on Sunday, "The United States is mired in a once-in-a century financial crisis which is now more than likely to spark a recession. He further add that there is more than 50% chance of a recession.
He said that the crisis was the worst he had seen in his career and still had a long way to go, and continue affecting home prices. The problem has not been resolved and "will continue to be a corrosive force until the price of homes in the US stabilizes".
The US financial crisis will definitely have an impact on the global economy as the US is the biggest economy and if consumers looses the ability to spend, US imports will fall thus manufacturing/exporting economies will suffer, leading to a domino effect.
This crisis IS the worst since the Great Depression. Is there a possiblity that the Great Depression is coming?
(source : http://sg.news.yahoo.com/afp/20080915/tts-us-economy-greenspan-972e412.html)
Bank of America has agreed to buy Merrill Lynch for US$50 billion. Singapore's Temasek Holdings owns about 13 to 14 percent in the US investment bank, with a total investment of US$8.3 billion.
There is high possibility that more major financial institutions will fall. What is still unknown?
Former Federal Reserve chief Alan Greenspan said on Sunday, "The United States is mired in a once-in-a century financial crisis which is now more than likely to spark a recession. He further add that there is more than 50% chance of a recession.
He said that the crisis was the worst he had seen in his career and still had a long way to go, and continue affecting home prices. The problem has not been resolved and "will continue to be a corrosive force until the price of homes in the US stabilizes".
The US financial crisis will definitely have an impact on the global economy as the US is the biggest economy and if consumers looses the ability to spend, US imports will fall thus manufacturing/exporting economies will suffer, leading to a domino effect.
This crisis IS the worst since the Great Depression. Is there a possiblity that the Great Depression is coming?
(source : http://sg.news.yahoo.com/afp/20080915/tts-us-economy-greenspan-972e412.html)
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