The banking crisis is about to get a whole lot uglier
posted on
Dec 17, 2008 01:17PM
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and there’s no stopping it—all thanks to China’s decision to end further investment in the U.S. The shockwave could wipe out what’s left of our wealth.
Here’s why…
The banking crisis, the liquidity squeeze, and the collapse in home prices has sent investors fleeing U.S. stocks as if by being chased by the running of the bulls in Spain.
The result has crushed the U.S. financial system, triggered a $700 billion bailout, and led to the demise of many hallowed financial institutions—blindsiding U.S. investors who have been told that “everything would be OK.”
And that’s not even the half of it.
The financial crisis has now spilled over to Europe, Russia, Latin America and Asian markets. Which is why European and U.S. central bankers coordinated a global rate cut of epic proportions.
However, now with China’s sovereign wealth fund cutting off further investment in the U.S., it’s no wonder why foreign investors have been avoiding ALL U.S. investments at all costs and are piling into China stocks hand over fist.
The reason is simple:
China is the only country that’s not only growing but also is now only interested in saving itself AND it has the financial muscle to do it.
You needn’t take my world.
That’s exactly what Lou Jiwei, the chairman and chief executive of the China Investment Corporation, said today at the Clinton Global Initiative conference.
“China can only save herself.”
This is why the $200 billion China had earmarked for overseas investments will now be plowed back into China Banks… and why the nation also plans to spend another $586 billion on new highways and railroads.
That’s why their pulling back from the world market and investing domestically.
As Obama economic advisor, Laura Tyson, put it, “It’s going to accelerate the move of economic power to Asia.”
Do you realize what this means?
The inevitable shockwave will drive more investors out U.S. stocks and in into China where they will profit not only from internal economic growth but also from currency appreciation and domestic spending as well.
And the result will enrich those investors who understand that capital ALWAYS flows to the highest return in good times and bad…
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