Paper cannot wrap in the fire...an old Chinese saying

While the scientists are busying ramping up the CERN system, seeking to unravel the secrets to the universe's beginning, mankind on the other hand, through their greed, is also unraveling the economy (please note that it is not just the financial sector), unseen by any man that is still alive (unless he is still alive during the Great Depression era...according to Greenspan's assessment).

My Mar08 blog highlighted the key economic events which more less has come to pass. Since we are entering into the final phase of the global economic disruption, I hope to provide a roadmap of the likely outcome of the economic (including financial) meltdown as

1. Some large US financial institutions are falling apart
2. The big corporates are failing (corporate borrowings are now very constricted which will lead to corporate failures)
3. US jobs are disappearing
4. US consumers (which accounts for 70% of US economy) has decapitalated, as they have run out of assets to mortgage away while piling up credit card debt of USD4 trillions and USD12 trillions of mortgage debt with ZERO net savings and other debts of probably another USD 4 trillions.
5. US national debt stands at USD10.6 trillions or 11.3 trillions with the mortgage rescue package(US annual GDP is USD13 trillion) and still piling up USD50 billions deficit on a monthly basis.
6. Boeing machinists went on strike from recently, stopping the Boeing production over demand for higher salary and outsourcing practice.
6. Foreign investors are now having cold feet when it comes to anything American debt, as US are fire selling (or shutting down) some of the biggest companies; Lehman operations, AIG, ...etc

Many US companies and citizens are now banging on FED's door for 'rescue' money.

1. After receiving USD120 billions in May08, US citizens is asking for another USD120 billions or more (as tabled by the Democrats to the US Congress)
2. After 'footing' the bill (in the form of guarantee of bad debt) of USD30 billions for Bear Sterns debt, market is banging the door for USD85 billions in AIG bail-out and many more to come.
3. General Motors, Ford and Chyraliser are also asking for USD30 billions from FED
4. To-date, FED has dish out USD900 billions. The list will get longer as the weeks passes, as more and more companies tumble


Beside USA, Britain will be the next country that will undergo severe economic downturn. Europe will slowdown and Asia economic growth will also eases.

It is now a foregone conclusion that the developed economies are experiencing recession, but the big question is WHEN will the global economy recover from this downturn. Some are still holding to their dreams that it will be similar to recent previous recessions of 6 months, while others are looking at a 1990s Japanese recession that lasted for about 15 years. Recently, Greenspan (ex-chairman of FED) thinks that it is close to the 1930s Depression or may even surpass it (as he calls it once in a century event). Our deputy PM, Tony Tan highlighted the danger of economic meltdown effects on the global social and political stability.

I will try to offer my views on the likely outcome of this economic unraveling in my next blog.