World Economic FACTS vs FICTION????

World economy IS facing challenges like so many other times in history.....

What IS different this time that the financial institutions were acting like "house of cards"...no real assets but lot of bad debts which were HIDDEN.....this time it was NOT "off balance sheet items"but nobody was monitoring WORTHINESS of value of assets in balance sheet"

Worldwide there was neither MONITORING of real RATIOS...but there was a GO GO mentality towards real estate......which were OVERVALUED by minimum 25%......

Unlike depression era...there was a QUICK & COORDINATED response from all central banks around the world.....to deal with this "horrendous SPIRALLING out of control situation".....

Central banks told all banks to clean up their balance sheet ASAP thus trillions in write downs & shore UP their balance sheet with issuance of equity & preferred.....Central banks also assisted with overnight lending facility by accepting sub-par assets.....

Worldwide central banks have reduced interest rates to as low as less than 1% in Japan & 1% in US.......

G20 meeting agreed on solutions to most issues faced by world economy..including TIGHTER & CLOSE monitoring of banks worldwide......

Worldwide liquidity HAS improved substantially.......

Inter-bank borrowing rates have come down to historical levels as per LIBOR.....

Worldwide there IS focus on "stimulus package" to ensure GROWTH......

Credit squeeze/crunch caused a PANIC in equity markets as investors pulled their money out...thus hedge funds had to DELEVERAGE "big time".....thus avalanche of MARGIN selling TSUNAMI day after day.......

VIX came close to hitting 100.....an index of FEAR.......

There has been many meeting of G7,G20,economic power houses in China,Brazil & now in Washington...with one FOCUS only.....NOT only to DEAL with what CAUSED the current economic mess but to PREVENT it from happening AGAIN EVER....

With this LEVEL of FOCUS & many UNANIMOUS recommendations........which should be agreed & implemented in March 09.......things could NOT be out of control ANYMORE.....

Yes ....there will be many side issues like GM,F & Chrysler which WILL be played UP on CNBC for rating purposes & FEAR mongering......but in the scope of things those will NOT impact GDP in any meaningful way......US & world economy CAN easily absorb issues like Auto companies in US need to face REALITY......No business should continue unless their COST structure makes sense...that is economics 101......you do not make things which nobody wants......

Remember the days on CNBC when Oil prices was discussed every 15 minutes ...because it was going UP....now that Oil has come down over 60%.....but there is NO analysis of benefits of this drop even once a day?????

Oil drop is adding benefit in several trillions of $ worldwide...but NO in-depth analysis on CNBC..because it IS GOOD news......CNBC business is to talk NEGATIVE & inject FEAR to BOOST ratings 24/7.......

So .....things are falling in place with worldwide co-ordinated efforts...do NOT let CNBC to undermine this major accomplishment......

BUY & HOLD is NOT DEAD.......only STUPIDITY is IN on CNBC....which believes that stocks selling @ or BELOW book is NOT the time to BUY & HOLD.....cannot imagine a "more retarded statements being SHOUTED ON in every CNBC program"

If Stocks should be AVOIDED @ all cost as per CNBC then WHY are they on the AIR & serving whose interest????

By the way ..last time I checked China will grow 8% to 9% in 09

India the outsourcing capital of the world is expected to grow 6% in 09

So..who is happy to BUY in this environment Warren Buffett,Bob Doll & many value mutual fund managers..who are NOT daytraders and are not PAID to SHOUT hourly predictions for the markets on CNBC.....

Most value investors KNOW that this crisis is on its last leg and offer "incredible value".....I will hate to include Jimmy the Cramer & Macke in the same sentence as genius investors of the world...who CAN see through the current malaise and SPOT value for major long term GAINS..

BLOG does NOT give buy or sell.

PS...Electricity was gone for several hours in north of Toronto....so could not finish on time.


Saleem