The old saying goes - "in the land of the blind, the one eyed man is king." This morning, published report suggest that European banks still hold more bad USA housing debt than the total bad debt from Greece, Ireland, Spain and Italy combined. HSBC announced that they will need to write off more bad loans in the US because the number of "strategic defaults" (people walking away from loans), continues to increase. To make matters worse, the front page of the New York Times business page featured two persons who did walk away, and how great this was for them - certainly an article which will encourage more defaults. To their credit, Citibank, BofA, etc. took more drastic steps than their European counterparts and were more aggressive in these write-downs (with the help of the US government), so their balance sheets are actually in much better shape.
But back to the American economy - by this time, the dollar should be worth about 3 cents on the international market with Uncle Ben's printing press in overtime, but the USA seems to be the "one eye man" in this case,and perhaps historians will actually vindicate Bernake, Hank Paulson, and even the hapless Obama for at least taking decisive action to "save" the economy - something European leaders can only dream of. Perhaps this mountain of paper-money will come back to haunt us some day, but there is actually the possibility the US could grow out of this mess - time will tell.
The DOW is back to near 12,000 on a good day (one in which there is no Euro disaster), and companies have never been so cash rich - even unemployment is showing signs of coming down, as American finally gets used to the New Reality Economy.
I am sure my counterpart on this Blog will have a different opinion, but for my two cents, I put my money on the USA this time around!
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