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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: elmatador who wrote (29461)	2/14/2008 3:56:30 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 218710

1.) When a major segment of the world economy goes into recession, you will discover that "de-coupling" is a bad joke. Absolutely most business around the world will continue, but take a big chunk out of Brazil's business and you get a recession in Brazil - the same for any other joint. Commerce with the US in recession will not be quickly replaced by trade with Martians. 2.) If low interest rates are no longer particularly helpful to the banking system, then low interest rates vanish. Japan followed a very stupid path. They refused to recognize the losses in their banking system in 1990. Instead they decided to play make-believe everything is fine. The banking regulator urged the banks to lend their way out of the crisis. So the Japanese banks lent a wave of money in Thailand and other SE Asia "tiger nations". And we all know how well that went. The resulting "Asia Crisis" made the problem at the Japanese banks ten times worse. So the next solution to bail out the Japanese banks was the "carry trade" which will also end in tears and further losses. The culture in the US will require the banks to recognize their losses in short order and sell stock to raise capital on terms very disadvantageous to current shareholders. There will not be any US Dollar carry trade except for a brief period. .