Remember the dotcom crash happened a few years back. During that time, everyone were so bullish on dotcom companies that they invested in company that reach few hundreds in PE ratio. PE ratio stand for price earning ratio.
Lately, a few major financial group around the world are reporting write off on subprime mortgages. Who to be blame on this? Will it hurt the world economy?
Remember during our 1997 crisis when our currency was attacked by speculators. It lead to downfall of the stock market and economy as a whole. However, our government at the time was smart to use Danaharta and Danamodal to revive the banking industry and clean up the non performing loan.
I guess the world economy power should learn something from us on this. With billions written off by the financial giants, the liquidity in the market will be reduced and it will definately bring down the economy.
Fortunately something big is happening. China and India are the emerging economy power. We shall wait and see when the financial impact hit US, it will benefit the emerging economy power as more and more funds will flow into the new economy power. So for those who are worried if recession is just around the corner, my point of view is, it will happen in US but not the world. Cause mighty China and India are there to lend hand.
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