Global reach of Lehman

[Sideshow]

So I just had a look at the Australian Stock Exchange and in the wake of the Lehman Brothers collapse, the Australian market is down something like 2 1/3 percent. While recently moves of 2 percent in either direction in a single session have not been uncommon in either the Australian or US markets, I'm interested in the wider implications of yet another collapse of a major bank. The body count of collapsed banks is rising, now we've had Lehman, Bear Stearns, Merrill Lynch was bought out, Freddie and Fannie were rescued... etc...

I'm sure these questions have been asked innumerable times around the world in the past year, but i think with yet another collapse and another decline in the trust of our financial systems, they're worth asking again:

Is the global economy too tied to movements in the US?

What viable alternatives exist outside of the US? Do you think the transition to another major economic power will have other implications on global politics?

and:

If you see China as a viable alternative, what do you make of the housing market/commodity market slowdown that is now occurring there?

[KommieKat]

Is the global economy too tied to movements in the US?

What viable alternatives exist outside of the US? Do you think the transition to another major economic power will have other implications on global politics?

and:

If you see China as a viable alternative, what do you make of the housing market/commodity market slowdown that is now occurring there?

I'm an American now residing in Hong Kong and the HK$ here is kept at a constant HK$7.9 to the American $ no matter what occurs.

I would say yes to your first question. The world is too tied up with the US and I would recommend seperation. We will not suffer the same as the US but there will be some effects and it gives us a chance to prepare and learn from the mistakes made by America.

As to your second part, I do see China as the alternative, with complete conviction, without doubt. Although I do have investments with U.S. treasury bonds, I will start investing in the Heng Seng and Shanghai indexes, in the (hope for) soon future.

Fortunetely or unfortunetely, America is suffering for many reasons. One being that certain institutes are not keeping up at the same pace as the new Wave requires. We, as Americans, lead the world with the IT revolution and we can see that America will be the testing grounds as to what will evolve from this new age we live in.
Some agencies will go under, which will be a natural occurance for this new revolution we live in. Same was true with the Horticutural, Agricultural and Industrial. Some of our education departments, banking, Money transactions, governments and so forth are still at the Industrail age mentality.

As for China, without doubt, it will be the world leader within the next 5 years. I have no fear about this. China has too much going inside her own borders to take care of, one being "catch up" with the world, the others being a transportation infrustructure like highways to connect the countryside with the cities, democratic structuring to fit with the 'new rich' and so forth.

[KommieKat]

Slight update: My friend who works for a big House (stock firm) here in HK says that recovery in the U.S. will be some 2 yrs down the road with still worse things to come.
As far as Asia, Korea is going to be hit the hardest.

His words, not mine.


Here's an article (not related to the above) from Yahoo News about the cause of this crisis:
http://finance.yahoo.com/banking-budgeting/article/105782/How-We-Got-Here-It-Is-Housing-Stupid

The article fails to mention that tons of money has been poured overseas as in a war, as in a country named Iraq. Spending money overseas does not help the home front.
How fucking stupid. Waste of life. Waste of money.

Neither does having $2000 in your savings account but charging $20,000 on your plastic card like Americas habitually do.
How fucking stupid. Money management is not THAT difficult.
Anybody and everybody knows that you don't spend more than what you actually have.

[Sideshow]

That's the problem with easily attainable credit, which is what this whole thing is about (as I'm sure you're aware).

I'm sure it won't happen, but I hope financial institutions and credit rating agencies (Standard and Poor's, Moody's etc) LEARN something about the availability of credit.

Australian hasn't done too badly, our share market is down 20 percent from the top so it’s a bear market, but we're being propped up by strong commodity demand. The only problem there's a two speed economy, there's the overcharged commodities pushing inflation up (about 4.2 percent, it should be 2-3 percent) so the RBA won't drop the cash rate in too much of a hurry plus tightening of wage increases/higher food prices etc making it difficult.

My concern is a sudden drop off in demand for steel in China (which happens as the housing market slows, which it is) because most of our exports are iron ore and coal. It's right about now I'm thinking the previous government that was in power for 11 years should have diversified our interests. I think we've had the second lowest spending growth (or second lowest in real terms, I can't remember) on education, which the previous government has a lot of responsibility for.

[Incognito]

I'm an American now residing in Hong Kong and the HK$ here is kept at a constant HK$7.9 to the American $ no matter what occurs.

I would say yes to your first question. The world is too tied up with the US and I would recommend seperation. We will not suffer the same as the US but there will be some effects and it gives us a chance to prepare and learn from the mistakes made by America.

As to your second part, I do see China as the alternative, with complete conviction, without doubt. Although I do have investments with U.S. treasury bonds, I will start investing in the Heng Seng and Shanghai indexes, in the (hope for) soon future.

Fortunetely or unfortunetely, America is suffering for many reasons. One being that certain institutes are not keeping up at the same pace as the new Wave requires. We, as Americans, lead the world with the IT revolution and we can see that America will be the testing grounds as to what will evolve from this new age we live in.
Some agencies will go under, which will be a natural occurance for this new revolution we live in. Same was true with the Horticutural, Agricultural and Industrial. Some of our education departments, banking, Money transactions, governments and so forth are still at the Industrail age mentality.

As for China, without doubt, it will be the world leader within the next 5 years. I have no fear about this. China has too much going inside her own borders to take care of, one being "catch up" with the world, the others being a transportation infrustructure like highways to connect the countryside with the cities, democratic structuring to fit with the 'new rich' and so forth.
Its really getting nauseating now. Just go do a suicide bombing already. PLEASE!

[KommieKat]

My concern is a sudden drop off in demand for steel in China (which happens as the housing market slows, which it is) because most of our exports are iron ore and coal. It's right about now I'm thinking the previous government that was in power for 11 years should have diversified our interests. I think we've had the second lowest spending growth (or second lowest in real terms, I can't remember) on education, which the previous government has a lot of responsibility for.


Interesting. At one time, the U.S. was the #1 exporter of technology and IT information to China and other countries.

Today, it's commodities like steel, cotton and recycled goods.
Exp: U.S. exports cotton to China. China makes fabrics and clothing from the cotton. China resales it back to U.S.