Asian Vs America

Malaysia and a whole load of Asian countries facing the 97 financial crisis, the thai intervene, Bhat sell down, Korean loan, Japan lends, etc.

During the crisis, the Americas came in with their free market strategies, talking about letting the failed companies work their way through, keeping the interest rates high as ceiling, and the intervention of IMF into the way we govern and run our companies, foreign funds were being deflected away by the implosion in currency value, the only differences is that those countries that did not take a loan from IMF worked their way up .

It was not easy, Taiwan from an agriculture and industrialization balance, worked the uphill task, china thru underground practices to traders, diligent planters and miners, had made their economy so powerful that if the spending did not grow so fast, saving could increase another year or two the economy would be even stronger. Inflation was never a problem for them until the 2005 ,where we start to hear about storm, disasters, and the sudden explosion in china bullrun. Capital control was still imminent in the chinese as they do not want to get a too large exposure to external forces after all they were a communist country.

Writing this we understand that the hoarding of cash by banks would create deflationary pressure, but do bear in mind that would be deflationary in Real estate and lending market. How about retail spending, utility energy production, labour market, food and agricultural markets, lean hogs and real pork prices in china have increased significantly and we would continue to see the upward momentum in food prices as population is not going to drop dramatically.

The US should had follow their own suggestions like keeping their interest rates high up to protect the capital and reserves, and deposits. Keep the money market with less money supply, instill the practice of saving in the nation of debt, these are practices that could one day lead them up again, instead of encouraging them to take up even more loan in terms of credit spending and the modeling of their entire government practices. Why would they save when it is not even worth saving anymore.

Keep free market mechanisms working, when a bank fails many would go down but that would not cost the nation and the dollar much but they would argue that liquidity must be given to the big financials, if they go down they wil bring down many. But many of those broke down together were gamblers in the first place, did they not understand the power of deleveraging of assets, they should be taught a lesson like the 97 currency speculators and defenders as the US would put it. But instead they walked the path most criticized which is the bail out route, Malaysia had danaharta, US had federal reserve, TARP,FDIC, etc. We bought out pn4 co, GLC, and inject cash, they buy out FFmae,Bearsterns, AIG and they have TARP for troubled assets.

Will cash hoarding result to Foreign funds diversifing their holding to some where out of their country if so today we are looking at the start of carry trade, the debase of USD will force Fund managers to start buying currency with higher yield and benefit from inflationary food prices as demand shortage will herd prices up not to mention cost increase. Oil have the full support from OPEC remember when they did not want it too high 146 was the peak and is now looking at 100 dollar as support, it will realise at least when OPEC wants that as a base. OnG fabrication and mining does not come cheap, so is gold production.

AUD n CHF is viable, the Chinese are very anxious about dollar holding, i would be cautious about gold entry as they would need to push the dollar up, but market force are fighting any attempts of manipulation, bear in mind the feds manipulated the currency with a desk of foreign bankers and central bankers, looking at volatility, fear, beta changes. We must also take a long term view in terms of food prices, they are going no where but up, how many times have u hear macdonald cut big mac's price, they have only revised up and never down. Sugar is in a high demand era, together with milk and coffee, take a good look at entry points and definitely see natural gas as alternative plays come in.

Please do not pass the 700 billion bill as the US citizens will see their money value shrink regardless of inflation or deflation, economy was always about fairness and balance in the system, so when there is a bank collapse the demise will bring the forward of a real strong financial institution. Not every financial institution qualifies to be a bank.