Monday, January 19, 2009

Financial Melt Down in Money Making Arena

I am a Business Economics major back in college. As such I do understand economics principles, paradox, theories and laws relating to economics. The US economy is now in recession and its deleterious effects in the world's economy was so wide spread. A lot of companies, factories and specially financial institutions was severely effected not only in US but also extends to other part of world such as Europe and Asia. More people lost their jobs, savings and investment due to the wide spread insurance of toxic assets.

Where on earth the money goes? The truth is do not look where the mony goes, it just that before the financial crisis, toxics assets have been rapidly appreciated into their fair market value, but when break out occurred, its value depreciated. The expectancy of its value was overlooked and that somehow it would be depreciated to its equilibrium level. The money just don’t go anywhere, it just that the assets (toxic) that a companies holds, expecting a higher value, turns out to be for a lower value, and no one will take the risk of further its negotiations for reasons that the players in the financial arena had been also intoxicated by these assets. As such, the toxic assets value rapidly depreciated. The negotiation capacity of these toxic assets went down, holder's expectation its value depreciated. And that’s the financial crisis sets it. An investment value with a high fair market value acquired at a high cost of those toxic assets, later depreciated. Its value now was so low, and that’s financial institutions was affected by the toxic assets they hold.

The US bail out plan to rescue its economy could somehow serve the purpose of putting pressures putting back the value, by bailing out those companies who now could have the resources to pay the insurance, equities, holdings, investment of those toxic assets to the other institution enabling the money to circulate that could ramp up the demands, and sparks productions.

A solution for us in these financial market is to start all over again, by grabbing all investment opportunities’ in a much wiser investor's attitude, by putting in safe investment houses our meager savings, be an entrepreneur and stays liquid and do everything we could to earn even a meager income. Look for every opportunities and grab it once it comes in your way. After all, 0 comes first before 1, to 2, and to 3, and soon. Just hard work will pave way once again to the road of our success.

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