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Briefly, the Finance Minister shared with us that there are 4 bubbles burst at the same time in this round of Financial Crisis.
Bubble #1 - Sub-prime Mortgage Meaning - Houses are mortgage without the ability to pay up the mortgage loan. In other words, we bought big houses with very little cash we have
Bubble #2 - Security Crunch Meaning - Each bank may package 5 mortgage housing loans and sell to another bank which in return will add-on another 3 mortgage loan and package it + interest, sold it to another party. Then another party, take these 8 mortgage loan + a few more mortgage loan + interest and sold it to another party.
Bubble #3 - Credit Crunch Meaning - People spending more than they have by signing credit cards and not able to pay.
Bubble #4 - Asian Bubble Meaning - Alot of Asia export depends on USA. With USA economy down, Asia will be greatly affected. In summary, the interest had escalated and reaches a ceiling that the debt incurred is just impossible to pay off. Every country is in deficit except for 3 countries - China, Germany and Middle East. Middle East is not cash rich but asset rich like oil, etc. Germany refuses to help the economy by purchasing the goods because they felt that the issue is created by USA and they should solve it within themselves. China is kind and willing to take out some cash. But China itself cannot save the whole world.
Finance Minister also commented that there are 2 ways to resolve this financial crisis :-
1) We just allow a very Sharp V shape to take place. A Sharp V meaning, let everything drops back to bottom and let things pick-up by itself again. Thus companies that are not performing, we just have to let it wind-up. Advantage of this is things will pick-up faster.
2) A U shape approach, is a gradual process but it will be a very slow economic recovery which may drag to 3 to 5 years. Basically no one has the answer to this financial issue.
He even commented that thru this crisis, there are opportunities except Singaporeans are not in the international standard to compete. Singapore may be very strong in structure and systems, but the Singaporeans are not competitive enough to compete.
Personally having walk thru the ground for many years, I realised alot of us are very shallow and do not had much depth and survival skills as compared to the foreigners.
Now is the time to rebuild our skills and other aspects and go in depth in this crisis, is what Finance Minister Tharman urged us to do.
And yes, let's seize opportunities in the midst of adverse situation and of course God has the answer only.
