From: M. M. Chowdhury (Mithu) <cgmpservices@...>
Subject: [khabor.com] Why USA won't able to get out of this financial mess
To: cgmpservices@...
Date: Tuesday, January 20, 2009, 12:41 PM

Dear All,   I think and believe that we in USA are concern like any others about financial impact in USA and rest of the world and where this will lead us in the next 8 years.  I congratulate President Obama for taking the USA leadership but I am cautious like others even though I have campaign for Obama among Bangladeshi Community in USA.   Let's see the scenario why USA is in this position which is very different than 1930's and what steps should be taken for the incremental improvement.   Reasons for this mess   1) More than $20T, start with Trillion dollars of investors money has been lost in the last 12 months including personal 401K money. So the people confidence in companies is lower than ever.   2) More than 500,000 jobs have been cut per month by companies in USA, if it's continue then at the end of 2009 total 6 million jobs will be lost.  Adding 2 million jobs already have been lost in the last 24 months.  This is creating a nightmare for the consumers to spend  discretionary money.   3) Two third of the economy are depended on consumer spending,  when consumer stopped buying like before,  companies can not make money, their stocks goes down and companies start laying off to make baseline profit for the company.  This is called a cycle of uncertainty.   4) Biggest problem is that USA consumers has borrowed two times of their house worth for the last 5 years.  For example, if a house price is $100K in 1999, it went up to $300K in 2006, so extra $200K was borrowed from foreign countries to mortgage people's houses in USA.  Therefore, deficit went over the roof.  If this is continued,  few wealthy countries might not be interested to invest in USA like before because losing confidence into USA economy and their investment returns.   5) Once people lost jobs, they can not afford to pay high mortgage which they could not afford at the first place.  US Govt can not pay everybody extra interest for the mortgage they owe to banks.  This might come over $10T, start with Trillion.   6) Once companies make less money, the Govt tax collection also becomes low.  So more deficit for USA.  Intake is higher than delivery.   7) USA does not have leadership of many technologies like before, so USA has more competitors than before i.e. China and India.   8) More liability for baby boomers in years ahead, means need more money to take care her citizens like Social Security and Medicare.   9) Iraq war alone costs USA close to $1T and need another $1.2T to take care veterans health and financial liabilities.   10) Dollar might go down compare to others currency once foreign countries start withdraw their investment or stopped new investment in USA, i.e.  stop buying USA Bond.   Options to way of of this mess:   So what do USA have now?  President Obama's sweet talks might not bring much fruits unless he can show leadership and put new policies in place very quickly, so situation does not get out of control.  I personally think that President Obama should do the following for the love of this country.   1)  President Obama should provide executive order to cut military budget of $465B to only $50B.  Bring all military installation back home unless foreign countries provide the bill.   2) Provide middle class incentives as soon as possible.   3) Stop giving big money to banks but give direct loan to consumers from Govt Treasure.  I know it does not sound Capitalist,  but US Govt does not have any other option.  For example,  If I know that this consumer will not able to pay back my money,  I won't make loan to him even I get pressured from Govt unless Govt takes all the toxic assets.  Same situation, Banks are not lending even they got US Govt money.  Banks know consumers do not have enough money or may lose job soon whichever is first.   4) Provide stimulate money if there is any Corrective and Preventive Action (CAPA) in place for the new projects which will create jobs.   I hope and pray US gets out of this mess but I am very pessimistic now based on the scenario I have presented you here, unless miracle happens in USA.   God bless USA and her people.   Regards, M. M. Chowdhury (Mithu), Virginia, USA www.amreteckpharma. com