經濟,財務,統計學,數理科學與政治評論

Dear Mr. Trump:

  Now the US is on the cross road to the economic booming years. On the surface everything is fine, but on the bottom of iceberg there are so many risks hidden in the US financial system. Maybe we could find something from reading a new book written by Bridgewater's R. Dalio. The name of book is Principles for Navigating Big Debt Crises. I have to confess that I have many different viewpoints with the book. In the latest 2008 case, I am totally disagree with Mr. Dalio's statement. I don't think the US governement does the right thing at the time. On the contrary, I believe the US government should follow the 1930's path to slowly adjust the US economy in order not to take more than 10 trillion US dollar government debt burden. It is a wromg deed from my viewpoint. But it is still a very important book for the guideline of US lately. It provides many things to think through and see through from the history. Even the Fed's leader, Mr. Powell, should read the book carefully. Now, we have to face the truly risks embedded in the US financial system with those overissuing bonds, stocks and other derivatives. The price of financial instruments is all much higher. It is time to face and deal with.

  The history may reveal its the obvious rediculous events over and over, but human should recognize those similar templates in order to avoid them with different tools and carefully acts. So does Mr. Trump with his team to run the US central government. It is time to face the hidden risks after ten years booming with several debt overissuing.

  To conclude with those risks, here is the summary...

 (1)A new form of credit bubble is happening

   For any booming economy, the credit increasing is a necessary evil. It bring more truly needed investment and create more jobs. At the same time, it also bring with over consumption on unnecessary things with pleasure. If people are in the class of higher net worth, then those consumptions could be resolved with own assets. On the other hand, if those luxury consumption is from the class of people living paycheck by paycheck, then those credit events may become some disaster to the financial system. If all those things get wrong, we may see some dangers from the domino effect with some credit events contagious to trigger other credit events. The same story happens to the US corporates. The tax cut brings more wealth back to the US. The only thing the Fed and the Trump's team should do is to help Americans preserve those wealth in a constructive way. To let those money flow into the future investment for a greater America is a necessary thing. To let those moeny not be spent on unnecessasry waste is a must be.

  The US investment grade corporate now issue more than 2 trillion corporate bonds with investment grade BBB, only above the junk grade one level. The fallen angel effect makes people nervous and stay at night with some soul-searching. It makes people wonder... Could those overissuing bonds may go default or with some not 100% recovery rate hereafter? May those unpaid debt trigger another big disaster to the US? And the most important thing is that the US always and everywhere has to resolve those debts with some fair market mechanism, in some sense with the government's support. It is largely contradict to the free market mechanism that the US society applies for years. We have seen the credit event resolution of 2008. to be honest, it is a bad classroom case to the whole world. It is a totally wrong act and response for a free society that the central government should not swallow all those strange shadow banking garbages and transform all those things into the central government debt. The US central government should let all those things go default with empty hand. Now we see more than 10 trillion US central government debt piling from the 2008 credit event. We do not want to see even burdensome similar templated thing happen in the US again. Mr. Dalio, in his book, praise all those acts as a necessary evil to help the market back on track. In my point of view,this generation of US to create such a big disaster leaves quite a large debt burden to their children. In the 1930's, that generation of US doesn't create so much debt to their offspring. With the luck of no war happening in the US, the next generation inherit a greater situation no other countries have. On the contrary, to save those garbage of US financial shadow banking disease in 2008, the US deplete all those money and energy to save nothing and create nothing but leave a greater burden to their next and next generations. It is totally wrong. History will remeber what those idiots have done to destroy the US.

  It always reminds us that the US is truly a dreamland in which everyone could find their handy things to get reward in monetary terms. So is the financial engineering. So is the credit triggering. We do not want the thing happen again but in a much strange way. We also have to remind the difference beteen the US and Red China. Red China could use the governemt hand to wipe out all those RMB debt as it wishes, but in the US, all those wipe-out must be based on some strick rules. We have seen the guarantee of the US central government with more than ten trillion debt piling. It makes the US central government have to face the shutdown risk every year thereadter. It should not happen in that way if all Americans get a more concious mind to reject the ruling of Democratic party. Maybe, Americans just choose wrong leaders in last two decades.

  To the cut or not cut rate, I still think patient is a virtue, Not to do the interest rate cut from the Fed is a better act now. The interst rate tool should be used to resolve the greater systemic risk from all those alarming indicators. The tool should not be implemented as one wishes but without carefully evaluation. Or the interest rate adjusting tool may become less effective to the US society. Now the US needs more rules to make clear who should take serious resposibile and how to deal with those things if all those credit events happening again. The US should have more laws but not rules to face all those issues, people suggest the US to face those things not with discretion but with strick law enforcement.

(2) Some unresolved financial issues from the 2008's trauma until today is still some mystery...

  To be honest, Mr. Obama is not a bad leader. He has done his best with his limited knowledge for the US society. Unfortunately, there are some serious issues Americans still not to face with some self-dealing mechanism. The one is the US dollar is an international currency. The US dollar may be the only currency that has other trading market outside its own country that large enough. We have seen the US dollar as some guarantee for other countries to lend or borrow for financial transactions. The event triggering in 2006-2008 is the offshore shortage of US dollar which brings some disaster to the European financial institutions. We all know the trauma has not been resolved after ten years. All those European financial institutions are still much weaker compared with the time before the 2008 crisis. But the US financial counterparts all get well. The emerging Euro has not replaced the role of US dollar yet to become a more important tool for financial transactions. We do hope that Americans have to face the fact the the Euro system is much fragile than other think. We do not see much prospect from the Euro system which could revolve the deep problem of all those European financial counterparts. The second one is the mechanism of US securitization. We need a more restrictive rule that requires all those security issuers having some responsibility to support and defend the price falling of the base tranches. The more lower credit tranches should have more strick protective rule to prevent the collapse of the waterfall. The US needs some rule to prevent the malfunction of its shadow banking or some well known financial products although we all know the size of shadow banking is much smaller than the time of 2006-2008. The credit bubble may still be brought from unseen things with the Fed has less regulated tools to deal. Maybe it is time to consider the Coco (contiingent covertibles) issuing for the US financial institution, but we all know that the perpetual prefered share issuing has already been a norm for the US. There still need some financial innovation with much strick monitoring for the US society to promote a much advanced society of US.

(3)The emerging market financing with the US dollar issue

  Now we still face the Turkey and the Argentina having Us dollar financing problem. We all know that the US tries hard to build some industries in the Turkey to prevent the country get into the hand of bad guy. We all know there are many financial instituions want to help Argentina not to be controled by those stupid socialists again. All those things showing the need of local currency funding system for all those emerging counties. In the old day, Mr. Brady has invented a bond called Brady bond to help the US financial banks resolve the south America' debt crisis. Now we need the US to give the building the emerging market local currency funding system a big hand. We need Mr. Trump with his team to defend the integrity of US dollar. We need the Trump's team to reshape the local currency funding system of emerging markets with some help as the guarantee of US dollar to help the US offspring having the merit from the new system.

(4)Non-skilled workers' job issue with some new form of manufacturing 

  It is time for the US to face the true nature of the much needed training of those non-skilled US workers. The US education is not much great for some jobs creation and skill nurturing. It is a deep inside problem we face all around the world. The Trump admistration asks a right question that Mr. Obama with his team not to ask. How to bring the manufacturing jobs home with all kind of means that precedent presidents do not dare to try is a great accomplishment that Mr. Trump does. We still look forward to seeing Mr. Trmp keep doing all those things to protect non-skilled American workers. Of course, we hope to see the Us government to provide more skill traing courses to those American workers. But we do appreciate that Mr. Trump dare to accuse the whole world about the unfair trade, the not responsible defense budget of alliances and other important issues huring all Americans many years till now.

  Americans have to face the higher cost of college tuition fees. Now the shrtage of skilled worker in the US make the revive of manufacturing jobs not that easy. Americans need the job training program to help a higher service industry to have a much higher paying job.