We are back to the question,How safe it is considered safe?
Is exchange of debt solves the world crisis? I doubt it.
Monday, February 23, 2009
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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