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The Rising Risk of Systemic Financial Meltdown

The next US president will most likely have a tenure of good rating...

Since the stock market, after continuing its fall to the floor (or quite possibly, even the gutters) will 'rise from the ashes' and have what the locusts have eaten well replenished during his term in office... hehehe...

He's such a very president...  

 

Oh yes! Forget about the Bull & Bear 'cos the next President (whoever he may be) only knows The Pig with Lipstick Cheers!

 

Time for another review ......  ;)

 

This is called 'Market Dynamicism' - Greeds created Fears and Fears created Greeds and money makes the world goes round. Historically, the FED had done well to contain Fears and the Market continue to create new ' ideas' to satisfy their greeds..........! Nothing new actually! Cheers!

 

A re-cap from point no. 6 of this article  :

 

It is possible that some large regional or even national bank that is very exposed to mortgages, residential and commercial, will go bankrupt. Thus some big banks may join the 200 plus subprime lenders that have gone bankrupt. This, like in the case of Northern Rock, will lead to depositors' panic and concerns about deposit insurance. The Fed will have to reaffirm the implicit doctrine that some banks are too big to be allowed to fail. But these bank bankruptcies will lead to severe fiscal losses of bank bailout and effective nationalization of the affected institutions. Already Countrywide - an institution that was more likely insolvent than illiquid - has been bailed out with public money via a $55 billion loan from the FHLB system, a semi-public system of funding of mortgage lenders. Banks' bankruptcies will add to an already severe credit crunch.

 

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Time to refresh and review this posting ....  :)

 

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Singapore is small and open economy and very much dependent on exports. With the world's economy slowing, the achievement in growth for 2007 is considered quite good by any standard. Of course, going forward will be tough and no plain sailing; but I'm confident that Singapore could ride-out the rough seas ahead. We must be thankful that Singpore has a huge reserve which will come to good use in bad times! BTW, h'investor, all the data you furnished are all in line with expectation of a slowing economy and not too much of a concern really! What concern me most is whether we could weather the slower growth! Cheers!

 

Hi ET88888, thanks for your reply too ... :)

You said "Singapore economy is doing very well", but I shall beg to defer.  In fact, I collected some news headline of Singapore economy performance since this Jan and would like to reproduce here :

1. Singapore's Retail Sales Fall as Car Purchases Slump
2. Singapore Exports Drop; Annual Gain Worst Since 2002
3. Singapore non-oil domestic exports fall unexpectedly in December
4. December NODX falls 4.5%, missing market forecasts
5. Singapore manufacturing output drops 1.7% in December
6. Singapore's January PMI dips to 50.5 points from 51 in December
7. Singapore's economy contracts: official data
8. Singapore Cuts 2008 GDP Estimate on Global Slowdown (Just reported today that we shrank 4.8% annualised in the last quarter)

 

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Whether one is better off in 1998 when Singapore was in recession or now, I'll let you decide.

Widening income gap is also happening in China and India

 

we are still seeing a battle of the Bulls and Bears...the latter is stronger...but the former is not giving up its fight as well

 

Think that the recent meltdown still doesn't have the "wake-up call" effect as many are still very positive....believe that we are still at the TIP and there is still a long way down....

Negative??? You can bet on it as the full impact is yet to be felt....

Might be wrong....but better to be safe than sorry.....

 

There is no denying current situation affects the poor more than the rich. Well no point arguing whether Singapore will weather the storm and if there will be retrenchment and job cuts. We'll see at the end of the year.

 

Painting a nice picture, S'pore will weather the storm, it does not effect the rich, so we will succeed in matter of fact. Most of the poor will be poorer due to d un-solve widering income gap. A few more millionaire will be made and economic report will again paint a rosy picture. Risk is get risker and only way to get rich is gamble. It is not going to get better, going to go turn ugly further down d road.

To the wise, spare a thought and save some for rainy day.

S'pore depending on India, China, EU (Gee...) and also alot on US to take in our factory products...rite. One down, not out, two to go.....

Oh!! about M'sia coming election. U know, i know Y...M'sia is looking for a new mandate to gov.

 

Hi Abitrager,

Yes, we are seeing higher cost of living. Frankly a large part has to do with fast growing economies like China and India. US is the largest importer of oil and now it is in a slowdown but oil price is not crashing down and the price is firm. 

If we didn't benefit from a growing Asia, then we would go back to previous times and headed for a recession. Jobs will be cut and maybe you will see more retrenchment.

Growing affluence will eventually result in some form of inflation.       

 

Hybridvestor,  Thanks for the exchanges.  The Singapore economy is doing very well.  We have companies that have strong fundamentals, high profitability, good cash flow balance, booming sector and yet it's stock price is going backwards.  Why ? Sentiments !  Rumours, Analyst comments, unscrupulous economists..buffet, sorros..etc.  The game is too complex, otherwise everybody makes money.       

 

winsontkl, glad that you find the article posted is interesting and useful to you .... cheers ....  :)

jasonfaxingliu & Arbitrager, I agree with your views ....  :)

ET88888, if the market is not proportional or related to the economy health, I don't know what is.  When we buy into the stocks of a company, we judge by their fundamentals like profitability, cash flow balance, competitiveness in their sectors, so on and so forth.  When the economy is bad or into recession, all the above will be affected, and hence it'll reflect on the value of the company, which in turn, affecting its share price. In the short run, I agree with you sentiments do play a part, but in the long run, the economy health is the key to a company success or failure.  :)

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Oh well... its a sad thing that ppl are beliving in positive rumours/progranda than ugly negative fact. Back then in Aug, when subprime problem1st emerged, ppl like now still thought lightly of it even MM Lee din say that its just problem and will not affect the banking system drastically and well look at the current situation... Anyway its ultimate depend on individual on who they believe in, be it right or wrong..

I am just here sharing my views and give some constructive comments for those who wants some differing views before they make any informed decision to buy or sell.

I am sure time will tell wat the mkt is heading to and I still believe market is rational and reflective of the country's economic health instead of becoming a casino based on sentiments and element of luck.

 

Very glad that MM Lee said about the Asia economy.  In US, the DOW is very abstract, it depends which economist is going to talk, they talk up and down it depends on who is in control of the day.  Similarly u see that STI moved up all thanks to MM Lee.  Hopefully SM Goh will re-inforce this tomorrow, perhaps Abdullah too.   De-coupling is the key to our success (I mean the market). Market is proportional to sentiments and not economic health.

 

to make things worse.. instead of creating more domestic demand in china and india, both of them are adopting a contractionary monetary policies increasing interest to curb inflation.. higher interest rate will deter ppl from spending and save more. and by the nature of their population.. their propensity to save is naturally high, hence in the short to mid-term.. i dun foresee China and India to be able to build up a demand big enough to absorb the fall in demand from the big 3.

 

Hi bro Arbitrager, you forgot to mention Mr Lee knows that Singaporeans are an amazing bunch. after last election's promises, they all forgot they got 'rewarded' thereafter (erp, cpf, gst, etc etc). 3 years from now, their dementia will hit them once again where they will forget about the erp gantry at their door step and vote with their coconut shells again. My take is that sporeans choose to screw their own arse at times.

For the past month, I have also screwed my own arse too, but investing in Kep corp. wat a mistake that was. wrong time, wrong target. haha