As I mentioned on Oct. 9th, the news pointed out the retail sales had significant declines. Today the final number of retail sales is published, 1.2%, and it is the third consecutive month of declines. Although G7 decided to inject capital to banks, in my opinion, it is just a short term solution. This capital injection may have some effects, for example, getting a loan from bank is not as hard as the past months. That may be useful to trigger the retail sales for a couple of months, but the problem of bad credits is still exists.
Even though the government buy banks, then another problem raises. Where is the capital from? No matter the capital is from the government or from other countries, the injection just means everyone shares the debt.
The follows are quoted from chat logs of me and my friend.
P: in my opinion, in short term, the capital injection is useful, but the economy must be in the beginning of slowdown.
P: For example, US government provides 250 billion capital injection and 700 billion bailout, but where is the $$ from? the residents? or other countries?
M: yes. that’s what i wanna say
P: if from the residents, it means US must cut off the annual budget…
M: numbers =\= real money. this is a very crucial point of our financial world.
P: if from the other countries, I think US is the largest debt country already. :p
M: i just afraid, this is going only worse until a “huge” break.
P: But, there is some advantages to be the largest debtor… every debtee is afraid of your death XD