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[OTHERS] Insolvency of Western coutries

Insolvency of Western Country
It had been 2 years and America is still not out from the graveyard of the last 2008 recession. The money supply that the U.S government is pumping into the economy is like one drinks water every day. But Why isn't the U.S economy gotten themselves out of the Recession after pumping QE 1 and QE 2? Its like you drink 20 cups of water everyday but still fall sick.

The worst case scenario is when QE 3 is pump. If QE 3 were to pump into the economy and the recovery is still stagnant, then U.S will have to raise their white flag. But one of the reason America’s large budget deficit is at a enormous amount, primarily the result of the economic slump that followed the 2008 financial crisis.

U.S is facing a tough time to solve their debt issue. What should the U.S government do to solve the issue?

Many people opine that U.S government should escalate the amount of tax, especially a vast tax should be impose on the rich. I would like to say that those people or cronies that state that, they are only looking on the narrow side instead of the broad view. The rich in U.S is becoming richer why? With the QE1 and QE2, this help the rich to generate more revenue. By generating more revenue, it actually help to increase the level of investment in U.S, and if the government were to impose tax on this rich bastard, there will be a lack of investment. With the lack of investment growing, U.S economy will be in deep shit. Not to mention, now the U.S is facing catastrophe of economy growth.

Thus, the only way that U.S can reduce their debt is by reducing their spending. For instance, they should reduce their spending on military which i don't think the U.S is so in need for the time being. Therefore, the U.S is having a dilemma of debt and economy growth. To cut their debt, they will need to be aware that it won't have negative impact on their economy growth or vise versa.

On the ground of debt issue, What if the U.S were to go into the next crisis or recession? Which i called it the "Insolvency Crisis".

If U.S were to dig a grave and enter into a recession, it will be worse than the 2008 recession. It will be a disastrous for the U.S to enter into a recession at this stage. Why? Base on the current U.S economy, it appear be much weaker than December 2007 just before the Recession. By measurement of most major of economic health including jobs, incomes, output and industrial production. Moreover, the U.S government will not have any money in their pocket left to spur the economy growth once more if they were to deep into a recession right now. The last recession, the Americans have lots of fat in their body to cut. But for now, they have only bone left to cut.

Cornerstone of this is to stay away from the market for the time being and observe what will happen to the regional and especially U.S economy. One of the good news is that ECB had agree to buy the Italy and Spain bond. My question is where do the ECB get the money? and what if Italy and Spain austerity measure were not that successful and they will end up defaulting their bond? Three words to describe this scenario. "Time to Die". The objective of ECB is to minimize the risk of the Europe economy and abbreviate the risk that the Europe are facing now. However, in the long term, it will have a mammoth impact for the ECB. It is like you are the loan shake. But you are buying the debt which the beggars are owing another loan shark from other country. Imagine the vivid situation here. Therefore, the U.S will have to come out with a genius government regime or secret recipe to spur the confidence of investors, businessman and the consumer confidence to revive their economy. Hence, U.S main focus now is more on how to revive their economy. With the robust economy, U.S will not face the issue of debt predicament anymore. We will see what will happen next.

Happy investing,
Daniel
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