So the poorest one-third subsidize wealthier people who took bad risks.

So both booms and downturns widen the gap between rich and poor, and smart entrepreneurship has nothing to do with it. Rather, it seems to be deliberate policy to create and widen social gaps!

Marx and Lenin are just sounding wiser and wiser with every passing year.

Brad, would it be a pain asking you to summarize these very views? Or-less painfully-provide a couple of links where one could dig them up?

Thanks v much

Thanks for the information and comments. As might see, I have been following Burton Malkiel’s book with my own investment, which relies on the long-term health of the US financial market. It is very unnerving to see United States practicing “socialism” to its financial system. Like it or not, a Darwinian system seems to be the only way to survive and prosper. Maybe the 21st century will see the coming of Karl Marx to New York and Adam Smith to Beijing.

Professor Malkiel urgently needs to update his book on the efficiency of the market, so little guys like me who have a day job outside economics won’t be sucked into any Black Tulip-styled games.

Jian Feng

I think even scenario number four is a relative term.
US may only win relative to China. Chinas economy is gonna get hurt worse but ours is gonna get hurt.

Seems to me a very hollow victory. “Yeah we suck but you suck worse”

Unfortunately this is where American culture has driven itself to. We take solace even in ugly victories.

No. You don’t even have to look back several hundred years. There has been a financial crisis every few years ago for the past several hundred years. There will probably some sort of crisis every few years for the next several hundred years.

Jian Feng: To avoid a mutually assured financial destruction, what will US and China do?

By very, very nice to each other. Which isn’t a bad thing.

Jian Feng: Will United States be prepared to issue visas to any willing Chinese buyers to purchase foreclosed houses in the US directly?

My guess is that there are going to be massive purchases of US companies and hard assets over the next few years.

Also, I don’t think that people are talking about the really big problem which makes the housing situation seem like a tiny firecracker. Around 2030, a lot of old people are going to start withdrawing their money from the US at the same time people get old in the US and Social Security and Medicare costs start becoming a major drain.

I think we may get the worst of all possible worlds, where many home owners lose their homes, after which the homes nominally appreciate while on the bank’s ledger.
But real wages will still go no where, since
the 2 billion laborers are not yet integrated
into the global system….

My guess is that protectionism kicks in eventually, when the political pain becomes
overwhelming….