Monday, August 13, 2007

The Story Of Uncle Sam - Part 2

The burst of the IT bubble in 2000 was traumatic in effect to the investors. Worldwide, the collapse of NASDAQ sent all other share markets to slump down, leaving great bloodshed all over.

The chain effects of the bubble burst eventually led the whole world into recession in 2001, with only a handful of exceptions, of which one of them was China.

Alan Greenspan, then the Chairman of Federal Reserve, took a defensive move by prudently cutting rates massively to loosen the American monetary policy, from the high of 6.25% to the decades ' low of 1%, to prop up the dwindling economy.

Uncle Sam disposed of his old house at a good price in late 90s and topped up the proceeds with a mortage loan to purchase a much bigger one. "Life is meant for enjoyment- never miss it if you have the means," he told his friends.

With IT going bust naturally meant that Uncle Sam was less well off now. He had to live with a subprime job.

Uncle Sam's investment in IT shares also shrank excessively after NASDAQ melted down from the high of 5000 to the low of 1200. Vaporized was his hard-built wealth in a most dramatic way.

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