Stitch,
while I enjoy a good political discussion or debate, my investments are my livelihood that demands priority. This forum is important because of the major role that Asia is playing. However, it does have a tendency to drift off to issues that are too broad, or simply mental masturbation by the crowd in the academia.
Let me ask you a rhetorical question: Do you belive the problems the world's economies face are due to hedge funds? Solely?
This is the one question from your posts that I think may carry more significance than the markets are recognizing and therefore needs to be addressed. Yes, I am beginning to think that hedge funds do have a major hand in the current global economic problems. No, not solely.
Think about Thailand as a house full of termites. It is not a good situation but the house is still standing and providing shelter for all. With time, the occupants can slowly eradicate the termites, replace a beam here and there, shore up the foundation and they have a chance of having a solid house to live in for indefinite periods.
The hedge funds are like typhoons blowing in to take advantage of a situation. By blowing the weak house down and carrying away its contents, the people now have no shelter. Is it the typhoon's fault that the residents allowed their house to be weakened by termites? No, but were the residents in the process of replacing some beams, leaving the house in its weakest state when the typhoon hits?
Intuitively, I think there is something wrong with this "game". On one side, you have the likes of Soros playing high stakes poker strictly for the purpose of stroking a big ego (I find it hard to believe that G Soros needs any more money) and some economic gains. On the other side, millions of people have their daily lives impacted or ruined by the success of the hedge funds. Is this free market at work?
The current major battle front is HK. If HK, arguably one of the most formidable opponents, falls. Then the rest of the markets are easy pickings. I wonder if even the hedge funds realize the potential consequences of their actions while searching for a quick profit.
I believe the lesson learned here is the value of stability, both economic and political. The IMF was the first line of defense. After wasting over $100B, the IMF has fallen. There is no chance that IMF will be adequately funded to address the current global economic crisis, assuming that we can somehow figure out how much it takes. G7 will be the next to fall. Despite of Bill Whatshisname's repeated assertion that the US economy is strong, the fact is that it is not. We are the largest debtor nation in the world. That alone will break us when there are not enough money sources in the world to finance this debt. Number 2 in the G7 is Japan. Well, we all know their status. Number 3 Germany is taking a hit from Russia. UK, France, Canada and Italy make up the remaining 4. Do you think any of them can wag the dog?
Around the end of last year, I started turning bearish. About two to three months ago, I became "chicken little". The major reason being that for the first time since I started investing, I cannot rule out a total meltdown in proportions that I have never seen before. There appears to be fewer and fewer solutions as time goes by.
Let me ask you a rhetorical question: Do you belive the problems the world's economies face are due to hedge funds? Solely?
That is a good question indeed. Are we going to remember July 2, 1997, Thailand, the same way that we remember Pearl Harbor, Dec 7, 1941? or Sarajevo, June 28, 1914?
Ramsey |
