I think you are every angry on what had happen thus far. Isn't that "you should understand the prospectus and the risk involved when you decided to invest or lend out the money"? it's risk and return trade off.
Even though pennies on a dollar is a bad deal, but if GM goes under you get almost nothing.
From current point of time, the Government has the tendency to fail GM, which they think is a better choice.
Check this out,
http://news.yahoo.com/s/ap/20090527/ap_on_bi_ge/us_gm_bondholders
From economics point of view, the cost of failing is not greater than the cost of not failing this giant. The government wants to create a smaller healthier company.
For your pocket, you should consider the deal, even though it's pennies on a dollar, it might worth billions in years to come with the new structured GM.
A real example, my Grandpa had brought a company's share about 30 years ago for 20 cents a share. And now it's about 2 million on 1% of the company.
So think again, it might cost you that much for now, lose half of your pension or more, but in years to come, it benefits your descendants. Isn't that our purpose to work hard in this generation, and we want our children to reap the harvest?
Wednesday, May 27, 2009
Wednesday, April 8, 2009
Do We have the choice?
http://education.wallstreetsurvivor.com/big-chill-gm
Fear is the factor, Obama has to conquer so that he can restore the investor confidence.
When recession occurs that's what we expect to happen, government interference.
Everyone is panicking, can we still put an assumption that all investor are rational? risk averse is not equal to rational, especially for the entire economy as a whole.
Fear is the factor, Obama has to conquer so that he can restore the investor confidence.
When recession occurs that's what we expect to happen, government interference.
Everyone is panicking, can we still put an assumption that all investor are rational? risk averse is not equal to rational, especially for the entire economy as a whole.
Thursday, March 19, 2009
Monday, February 23, 2009
How safe it is considered safe?
We are back to the question,How safe it is considered safe?
Is exchange of debt solves the world crisis? I doubt it.
Is exchange of debt solves the world crisis? I doubt it.
Wednesday, February 4, 2009
What a prefect idea?
People are spending less and saving more!
http://www.nytimes.com/2009/02/03/business/economy/03econ.html?hp
The Multiplier is losing it's ground and the money goes back to savings!
http://www.nytimes.com/2009/02/03/business/economy/03econ.html?hp
The Multiplier is losing it's ground and the money goes back to savings!
Tuesday, February 3, 2009
A reflection on economic crisis
Is Keynesian model gonna work? not this time! it is only good in efficient market and market clearing condition. The result would be less than expected, which we supposed 1 dollar of government expenditure would have 1.6 dollar effect on the system. But.. but.. but.. to invest in those troubled companies, I doubt it. Those companies are troubled because of inefficiency in operation. The effect may be less than a dollar!
On the other way, the market fear has conquered the system, investor has pulled out from the stock market and in result of the snowballing effect. What the government should do is to re-evaluate the companies, and pump in not just money but confidence to those healthy companies.
The problem is, it is difficult to evaluate off balance sheet, non-transparent asset. Therefore, further government regulation is needed, not buying the troubled assets. Maybe partially insured them is a better idea. The rest of them that were not insured, surely the market can deal with it.
The huge government expenditure now is going to put the country in perpetual debt that is compounding. In result, higher tax liability in the future, assuming people are rational. They will tends to save more, spend less, not just because they might lose their job tomorrow. WE human are risk adverse, always look for security by nature. Whereby United States is a nation that depends on consumer spending, I believe the crisis is changing the economic quite differently.
Then, we have to grow our own wheat and corns, focus on our value added manufacturing industries, instead of shipping the jobs out of America. Some may say, "it is cheaper" to outsource the jobs to some where else. But we should re-think from the economic social benefit point of view. No jobs for us, means no income, means no spending we could not even buy local goods/produce, don't even need to mention foreign goods. The second problem is, Quality Control. For example, have you ever call a customer service, that the representative don't even know what you are saying? or you can't even understand what they are talking about?
That put us to ponder before we make any conclusion, we'll see what would happen next.
On the other way, the market fear has conquered the system, investor has pulled out from the stock market and in result of the snowballing effect. What the government should do is to re-evaluate the companies, and pump in not just money but confidence to those healthy companies.
The problem is, it is difficult to evaluate off balance sheet, non-transparent asset. Therefore, further government regulation is needed, not buying the troubled assets. Maybe partially insured them is a better idea. The rest of them that were not insured, surely the market can deal with it.
The huge government expenditure now is going to put the country in perpetual debt that is compounding. In result, higher tax liability in the future, assuming people are rational. They will tends to save more, spend less, not just because they might lose their job tomorrow. WE human are risk adverse, always look for security by nature. Whereby United States is a nation that depends on consumer spending, I believe the crisis is changing the economic quite differently.
Then, we have to grow our own wheat and corns, focus on our value added manufacturing industries, instead of shipping the jobs out of America. Some may say, "it is cheaper" to outsource the jobs to some where else. But we should re-think from the economic social benefit point of view. No jobs for us, means no income, means no spending we could not even buy local goods/produce, don't even need to mention foreign goods. The second problem is, Quality Control. For example, have you ever call a customer service, that the representative don't even know what you are saying? or you can't even understand what they are talking about?
That put us to ponder before we make any conclusion, we'll see what would happen next.
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