What is happening to the US economy and to the rest of the world's economy as well?

I guess it was not a complete shock that a financial services company would file for bankruptcy in the US especially with what's been happening to their economy. The only shock was that it was a company as big and as established as Lehman Brothers.

The question here is why would the US government allow such an established financial institution like Lehman Brothers go down while Merrill Lynch and Freddie Mac and Fannie Mae were "seemingly" given a helping hand.

How much percentage of China's overseas investment does Lehman Brothers have? Now thats a US$ 1 trillion question.

In the Philippines; there are reports going around that some local banks and some financial services company will lose money (big or small... we'll soon find out) or be affected by Lehman Brothers going bankrupt.

AIG is having "financial difficulties" as well. They supposedly hold US$ 1 trillion in financial assets from 130+ countries all over the world.

How will the new US President cope with these problems?

If you've read my previous blogs..... where's those general sweeping statements I'm waiting for?:)

sigh...... deep sigh.....

impressions on US economy

Last September 12, 2008 as reported on Reuters; the US government refused to provide aid or assistance to help rescue Lehman Brothers

They highlight 3 important differences between Bear Stearns and Lehman Brothers cases and why was one "provided assistance" and one wasn't

First, Lehman’s business mix differs from Bear’s.

While Lehman is bigger than Bear, it is less deeply involved in the systemically important credit default swaps market and clearing system.

Second, while the crisis at Bear stunned the markets, other financial institutions have had six months to prepare for the possible failure of Lehman. In the Bear crisis, the risks were extreme in part because they were unknown and unmanaged.

The New York Fed has conducted extensive stress tests in order to attempt to evaluate the impact of a Lehman failure on markets such as the CDS market and it believes the systemic risk is quantifiable and lower than the risk that was posed by the imminent collapse of Bear back in March.

Regulators have also evaluated the risk mitigation strategies put in place by other banks and the authorities believe them to be robust.

That suggests the risk that a Lehman collapse could trigger a domino effect of failures at other financial institutions ought not to be great

Third, the Fed now has in place an emergency liquidity facility to guard against the risk that Lehman could suffer the kind of sudden funding strike in the repo market that sank Bear.

This should ensure that if Lehman does collapse, it does so in a slower and relatively orderly fashion, allowing it to wind down business operations in a way that does not cause sudden shocks to markets.

Hmmm......

I am not an expert but isn't a collapse of a financial institution (big or small) could be and would be counter-productive to a free-enterprise economy like the US?

Isn't an economy's health and "robustness" based on an individual investor's perception on how strong it is?

Whatever your individual decisions are..... agree or disagree with what the current US government did; at least that is still a concrete stand on the issues at hand.

If you've read my previous posts.... I'm still waiting for those general sweeping statements on what a US Presidential candidate will do to the US economy.... especially after everything that happened so far recently.

Problem is; he's still waiting for his economic advisers and economic policy makers. Most of them are still playing for teams at the Quidditch World Cup and finishing their dissertation for their PhD at Hogwarts.

sigh..... deep sigh.....

US Presidential campaign and elections

I became a fan of Barack Obama when he first announced his decision to run for US President. I was ecstatic that an African-American can now run for US President even if his political experience is very minimal.

His platform was CHANGE.

I was one of the people; for lack of a better word; mesmerized everytime he came on stage to speak or to give a speech.

Recently, I have been having second thoughts as to his REAL abilities to run a country as dynamic as the US, if and when he gets elected.

This all started over a few beers a few months back when I was discussing with some friends together with my AIM professor/guru Maya about Obama. She told me to "listen and comprehend" NOT just to listen to Obama's speeches.

As I started to "listen and comprehend" Obama's speeches; I have come to realize that there is not much substance in what he's saying. He only keeps going on and on about CHANGE and GENUINE CHANGE.

He has not spoken about almost anything that he wants changed. Maybe he did; but very minimal in my opinion.

He has NOT spoken anything about what he will do to the US economy in general or in detail. I'd even settle for general sweeping statements from him. But I'm not hearing this.

US economy is important because almost everyone gets affected if the US economy is booming or in recession.

I even saw Michael Moore (the controversial director of Fahrenheit 911 and a staunch Obama supporter/campaigner) being interviewed on Larry King Live a few weeks ago.... comparing the US to a broken car.... if you have been fixing your broken car with the same wrench for the past 8 years; it's about time to drop that wrench and pick up another wrench. The new wrench might not be the best wrench for the job; but the least you can do is to try out the new wrench....

Obama and the Democrats are just banking on US citizens FRUSTRATIONS with George W. Bush and the Republicans; nothing more. This is what they mean by CHANGE....GENUINE CHANGE?!?! change your frustrations?!?!

And since Obama has the greatest mass appeal to the younger generation compared to the 72 years young of John McCain; guess who the younger generation of liberal-minded Americans are supporting?

sigh....deep deep sigh....