US Economy Injured
USA has never been in the center of the world spotlight like this before. Both of its economy and politics for once drawn more attention than what Paris Hilton and Britney Spears put together. For now.
I couldn't resist to write a paragraph of spoiler to my next coming article, Sarah Palin. To the outside world, peering into the US, could not ignore and gobsmacked on what the heck some Americans would even consider, not only raw prawn, not-so-smart, not-so-prepared as a VP candidate. All it needs is a big buzz - and hooray, call 134789 or SMS P-A-L-I-N to vote. It's like, it is ok to have a bad publicity as long it is a winning publicity. It is also like watching a person running nude in a big financial district at lunch time, you just cannot ignore and feeling utterly speechless and shocked to the core. Yes, like many other I am not into politics but I am distracted by that streaker on the street! It is another horrible reality show. Only difference is nuclear & veto power. Sarah Palin reminds me of the kampung or village head that is crazy for power and status, and you could only imagine what she can do with those powers. She would be the female Syler!!
But for now, let's look at the current US economy.
Let's face it, US economy is like a bloody A380 Airbus. We marveled its strength, size and reach. But if it fly really low, we all shit in our pants. It is going to be a big crash, with ugly explosions & casualties - just horrific to watch.
To illustrate how the crap hit the fan in chronicle order;
- Aug 2007 American household begin to feel subprime whiplash. (the virus)
- Oct 2007 Citic pumped US$1B into burnt Bear Stearns (Invest bank & securities trading)
- Nov 2007 Abu Dhabi Investment Authority injected US$7.5b into CItiGroup (banking)
- Dec 2007 Singapore Government Investment Corp - US$10b into UBS
- Dec 2007 Morgan Stanley turn to be CPR'ed with US$5b from China Investment Corp
- Dec 2007 Merrill Lynch sold a portion of its to Temasek for US$6.2b
- Dec 2007 US Fed got lenient with collateral on loan
- Mar 2008 Bear Stearns sold to JP Morgan
- Sept 2008 Fed bought over Fannie Mae & Freddie Mac (mortgage companies)
- Sept 2008 Lehman Bros bankrupt (predicted as early as March 08)
- Sept 2008 Bank of America bought Merill Lynch for a bargain US$50b (Temasek still holding 14%)
- Sept 2008 US Fed US$85b bailed out of AIG (Biggest Insurer & MANU sponsor)
- Oct 2008 my birthday (it supposed to be good - dont worry)
So as you can see, it is pretty messy. These obese heavyweights crashed to the ground with a big thud, squashing everyone below who was still there "ooouuinngg" and "ahhhinngg" just like when it was flying high and proud.
Most of these banks and investment arms made their money from lending and borrowing, or invested in lending and borrowing businesses -mortgage in particular. If US Fed did not come in to clean the mess, for a sweet nearly 80% stake in return (and the rights to give the management the boots) - mind you, AIG would have been burnt to ashes, along with nearly 120,000 jobs worldwide. A disaster concoction of recession. Oh yes, Manchester United will play without sponsor brandished on Christiano Ronaldo tummy.
With US economy sneezes, the world gulps aspirins. This time US economy is warded with a chronic cold (subprime virus) and what could be happening next. One thing for sure the biggest and the mightiest investment arms of Asia unveiled themselves to play a Saving Private Ryan role that was at once stage would be impossible for anyone to perceive. It is tantamount to convince anyone on the street that an Asian will win the next 3 Wimbledon or PGA Slams. Asian bank and investment corp saves Western banking and investment skin. Impressive, huh?. It would be cliff hanger in financial world right up to Christmas this year, I reckon. If I were you, I would split my investment in share to 20% and 80% fixed interest for the next 12 months.
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