Signs of Hope in Troubled Economies
If you’re keeping up on the buzz in Washington regarding the current financial crisis, you know that Alan Greenspan recently called it a “once in a century credit tsunami,” and you’re also aware that a new stimulus package is being strongly recommended by Federal Chairman Ben Bernanke and House Speaker Nancy Pelosi.
In fact, in an effort to convince the government to shell out another $ 150 billion in bailout money, Nancy Pelosi proclaimed, “I call on President Bush and congressional Republicans to once again heed Chairman Bernanke’s advice and as they did in January, work with Democrats in Congress to enact a targeted, timely and fiscally responsible economic recovery and job creation package.”
Let’s not forget that this recommendation is in addition to the $ 170 billion plan that handed money to Americans earlier this year, the recent $ 700 billion package to bail out struggling banks, the $ 85 billion lifeboat that saved the drowning AIG, and the list goes on.
In case it makes you feel better, our country isn’t the only one throwing money at its institutions’ financial problems. Just to name a few, South Korea has forked over $ 100 billion, Russia is out $ 120 billion, Germany is planning to spend $ 65 billion, and the United Kingdom has put aside $ 50 billion to help ease its country’s financial woes.
The one country that isn’t lifting a finger to help flailing banks is China. In fact, the’re looking at massive future growth in the economic department. How do they do it? Because the Chinese government strictly mandates how much money Chinese institutions can pour into non-Chinese securities, their banks own only a handful of America’s default mortgages. Definitely not enough to even put a dent in their financial security.
As if that’s not enough, China is also taking aggressive measures to make sure they don’t end up in the same financial mess so many other countries find themselves in. For instance, they plan to decrease down payment requirements and slash interest rates on mortgages in an effort to keep their real estate market alive and kicking. On top of that, the Chinese government also began waiving the transaction and value-added taxes on home sales. The results are already showing in the form of dramatic increases in Chinese real estate stock.
The Chinese government has a few other tricks up their sleeves to keep their economy booming, and so far, it’s working. Want proof? First of all, their retail sales have seen record highs this year. During their national holiday in late September/early October, nation retail sales levels jumped 23% over the previous year’s, the highest increase in almost a decade! Apparently consumers are hitting the malls to spend the money their government is saving them in property deed taxes and mortgage interest rates.
As if that’s not enough to prove a healthy economy, the Chinese government’s bank account holds nearly $ 2 trillion.
My point here is that in spite of the economic troubles faced by so many around the world, there are still signs of hope out there. I also want you to be aware that there are healthy investment opportunities out there for those of you who aren’t sure where to turn in these uncertain times.