|July 2007 - America's "Jin1 Rong2 Feng1 Bo2", or America's "Gam Yung Fung Bou"
||[Dec. 15th, 2007|04:34 pm]
NOTE: I am writing this hastily because I haven't had time to flesh out thoroughly and structure formally an essay; thus, these arguments and opinions are subject to change over time.|
If you ask me how the 2007 and current subprime credit crisis in the United States started, I would say it started with China selling US Treasuries back in April. Any slow down or deceleration of the buying of US Treasuries (i.e. our debt), causes downward pressure on America's credit - an outright sale spelt disaster.
I will venture to say, as a thesis, that the significance of the 10 year anniversary of the 1997 Asian Financial Crisis 金融風暴 ("Jin Rong Feng Bo" or "Gam Yung Fung Bou, (Cantonese)") was not lost on Asians (in Asia) and the Chinese, both Mainland and Hong Kong, in particular. To them (ref: Sun Zi Bing Fa), the crisis was precipitated by a coordinated number of Western (US and UK) bankers and investors whom brought the Asian "Tiger" economies (Hong Kong, South Korea, Taiwan, Singapore) to a halt, devastated Asian economic confidence, and strained China's economic growth. It was a complete bitch slap to China, having occurred right after the July 1st Hong Kong handover.
I think in July 2007, it was China's turn to serve US an Asian Financial Crisis.
I do not blame China for doing so. I refuse to call it unfair, or unjust, or cheating, or conniving. Over the past decade, China has worked extremely hard, insanely hard, at their economic growth and technological development. It's exemplified by their top students whom I went to school with - they don't pull all-nighters - they pull all TWO-nighters.
China has been patient and patiently waiting. They've patiently tolerated every setback and affront the US has handed them until this year, from courting Taiwan's separatist elements and the Dalai Lama, to sitting President Hu Jintao on the White House lawn for lunch, only, to the 2001 Hainan aircraft accident. You can only piss a guy off so many times.
On the other hand, I've seen the ugliness of the excesses of the United States. I had seen too many young and naive Americans feel they were and deserved to be rich millionaires from flipping condos, flipping McMansions, and moving this paper into that paper, i.e. mortgage financing. In no time in the history of the Republic could someone buy a house with no money down. With interest-only mortgage financing.
And from such a real estate bubble, I saw a gaudy explosion in the purchase of Hummers, SUVs with the 20 inch rims that make the vehicle utterly energy inefficient, plastic surgery, indoor swimming pools, and endless housing developments that could not last. This way of life could not last. It was rewarding excessively the wrong people for the wrong behavior. When the value of hard work and new ideas takes second-place to condo-flipping and being first, America has a problem.
So I don't place any blame on China for springing this Gam Yung Fung Bou on America. Their play was good and they caught America in a weak position.
But I play for the American team. I am first an American - I don't shy away from that fact.
The political economy of the United States is bad; there is no getting around this for the next few years. We have about 200 billion US dollars of writedowns for Wall Street to go. We have not yet addressed tort reform and excess litigation and class-action lawsuits (i.e. too many lawyers) which harm America's competitiveness. Housing is in a deflationary spiral (i.e. buying a house now is like buying a car now - once you buy a house, it goes down in value). We have an increasingly protectionist and tax-friendly, Democratic Congress. We have slowing corporate profits for great American companies domestically (go hear a Johnson Controls, Caterpiller, United Technologies conference call). The US Dollar is no longer the defacto reserve currency of the world - it is a joke. We are a drag on the world's economy, when the Rest Of the World (ROW) is growing rapidly and experiencing positive change and new opportunities, and optimism daily.
My fear is that America is being left behind in the world.
But I will not underestimate the strength of individual enterprise and individual risk-taking of Americans. Time and time again, Americans have faced crisis and come out stronger.
We will clean up our act. We need a major bank who recklessly pushed mortgage-backed paper to fail. We need this entire industry of mortgage lenders and home builders to be wiped out. We need the realtors, mortgage brokers, condo-flippers, and housing developers to be wiped out. And then we could rebuild.
I believe we will come out more hard-working and more innovative and creative out of this crisis than before. The macroeconomic picture for the US is not good for the next few years, but I will not bet against the microeconomic picture - the individual American will discover new technologies, and create new businesses and new jobs just as we've done before.
And then in less than 10 years, it will be our turn again to turn the tables on the Chinese. Because we will have worked hard (and harder) and learned from our lessons to deserve it.
So it's up to us Americans, not Congress, not the Federal Government, not the Federal Reserve, to help save America, because America does need saving now. But I am still optimistic about America. Honestly, I like living in Europe much, much more; I like the European lifestyle over the American lifestyle. But I am cutting short my stay because I still believe in making it big in America and being my best for this country.
We're still the country that makes dreams possible, and I still believe in America.
And afterwards, I'll go back to shopping in Milano and hanging out in Praha. USA!