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Tuesday, February 27, 2007

Asia's sneeze - Wall Street's Pneumonia

This is a first.

It used to be a fall in Wall Street lead to a fall the next day in the Europe markets. Now it is the fall in Asia that caused today’s 500 point drop on Wall Street.

That alone should signal how the world has changed. The old saw was “If Wall Street sneezes, Europe catches cold.” The new version is if they sneeze in Shanghai, Wall Street catches pneumonia, from the looks of that negative 500 point plummet. And it may not be over.

Welcome to the 21st Century of Asia’s financial dominance. With China gathering billions in reserves (and IOU’s) from America’s heavy borrowing to cover our deficits, it was bound to happen. Borrow-and-spend policies have gotten us into this dangerous state where our finances are affected by far off events like a China economic hiccup. If China has a major banking crisis, Wall Street could totally melt down.

Now that we need MORE information on the events in other countries that can impact us and our fortunes are ever more tied to events in far off lands, our our news media continues to cut their foreign news bureaus.

This will cost us valuable perspective on trends we need to be aware of to avoid future financial 9 11’s which can be as deadly to retirement funds and economic vitality as human terrorism.

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