Recession

Subprime estimation loss is around USD 300 to 400 billion. The market become a seller market when everyone trying to cash out of the market.

What happen in the market is knee jerk reaction of the subprime crisis. Market try to reaccess how much losses incurred by the subprime crisis.

Then the chain reaction happen.

When market are selling, more and more funds around the globe need to sell because everyone trying to escape the fall. So the market fall.

Secondly, everyone are worried that USD will drop further. They started to sell and buy other currency. Some invest in bond and gold.

Then the oil price. When USD fall, it become cheaper for others to buy oil. The demand push up the price.

Back to the question recession. Common sense, if oil price is high, that show world market are growing. How can recession happen when world market is booming?

Subprime crisis is like NPL loan in Malaysia. 300 to 400 billion is very small figure for a market like US. Furthermore, the losses are incurred by financial institution and not whole market.

Have you heard of whole world financial institution collaspe. In a way, bank close shop. No one buy shares. No credit card to use. Sound insane right.

These FI will find their way to overcome the losses. Furthermore it is paper loss and believe it, they have the way to overcome it.

I don't believe recession will happen anytime soon as there is margin for US treasury to reduce interest rates in preventing recession.