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Economic Sense and China Stimulus Package

2008-11-10 20:43:00

Economic Sense and China Stimulus Package
I feel compelled to give my opinions on some ideas about the current global economic situation.

Khao San Road, Bangkok Thailand
Tuesday, November 11, 2008
Blog of Andy --- --- Travel Bag Design Survey --- Professional Traveler Bag

Yesterday, China announced a stimulus package that equaled about 20 percent of their Gross National Product.

---- Hyperinflation happens when a government starts spending close to about one-third the amount of money that equals the GDP in a year.

---- The decrease in value of the Chinese money would help them to sell their products.

The Dow Jones went down after this good news, or maybe it is good news, not to me, but to the world.

---- The institutional investors sell into good news.

For many years, every young naïve investor on the planet has considered the stock market stable, this is insane. However, these young enthusiastic, not too bright investors may help to save the day. They have been told; buy stocks when they are low…

They are low, so they are getting back into the market.

---- I think the Dow Jones will go down to 6000, and hopefully stops there, but possible to go to 3000, 5000 would be proper.

There are ripples of economics problem today that will turn into waves within the next six months. This is a new situation, the sadness, the pulling of money out of investments to be used for living expenses have not yet occurred. This is just the tip of this iceberg. Most of the world has yet to see the first ripple effect of this downturn, presently it located in the developed countries, about 20 percent of the planet, the 0ther 80 percent has yet to say hello.

Think about this, we are dumping money into the finance arena, to help encourage them to loan money, which by the way caused the problem in the first place.

Time for me to lobby, I wrote a letter to the editor 15 years ago, that the 30-year mortgage could cause a depression, this type of loan should be outlawed, the maximum allowable should be 20.

This is truly a Catch 22, the solution is to save money and deleverage, if people save money then this recession will become deeper.

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Economic Sense and China Stimulus Package