Global financial crisis is deepening:

- The global financial crisis that started with US housing bubble bursting is now hitting hard the global credit market on a massive scale. Investors and companies have been experiencing potentially irreversible and surely widening illiquidity in the credit market worldwide.

- The credit market for companies to borrow/lend money via issuance of commercial papers, for investors and hedgers to buy/sell credit default swaps (which is similar to insurance for potential default of a bank), for student loan, auto loan and credit-card loan, etc. have been freezing. This is expected. Why? consider this: if a complex financial instrument/security backed by prime, Alt-A, and sub-prime mortgage could collapse (it did collapse big time), then certainly a more or equally complex yet less-safe financial instrument/security backed by nothing but just promise of future streams of payments could easily collapse as well.

- Various credit market segments seem destined to systemically collapse one way or another, sooner or later, one by one, unless governments globally carefully take immediate and highly coordinated global actions either through implementation of better regulations, interest rate cut, combined with massive global economic bailout and/or massive government investment/injection packages.

- Decreasing global confidence level in any asset classes but cash and short-term government bonds tends to have negative domino effect and will take a long time to reverse as shown by the declining stock markets around the world despite various government interventions and bailouts.

- Nothing is completely safe nowadays except cold-hard cash (preferably in US Dollar since it is now relatively safer than any other currencies except perhaps gold - although I am personally not a fan of gold as investment) and very liquid but very low-yielding short-term government bonds.

- In general, it appears that general commodities and equities globally will decline further or stay stagnant at best for the next few years (could be up to 3 years at minimum. Very lengthy L-shaped recession ala Japan could also potentially happen to US and global economy). Housing price decline is not over yet and very likely will continue to be bearish and slow for the next 2-3 years.

- Any country is not immune to this massive crisis. Iceland is collapsing. People think it is because Iceland is just a small country which is true. But people forget, any countries regardless of size can collapse because they have too much debts and sinking internal demand. A country is just like a massive corporation; its citizens and residents are its shareholders. Hence, the proper questions to ask any countries are:

• How much short-term and long-term debt and surplus/deficit the country has relative to its gold & foreign reserves and GDP?
  
• How high is the confidence level that global investors assign to the country?
  
• How strong and stable is the internal economic engine of the country such that it does not rely too much on global demand?
  
• How intelligent, effective, and wise are the leaders of the country?
  
• What has the country been doing to quickly and effectively deal with the current global financial crisis?

"No problem can be solved until it is reduced to some simple form. The changing of a vague difficulty into a specific, concrete form is a very essential element in thinking." ~ J. P. Morgan

This crisis shall pass just like any other crisis in the past. The question is how deep and how long.  The global bear market and recession this time appear to be a painfully long-one and very close-relative to US recession in 1930s. As such, investors and business people should be patience and use their common-sense.  The new game in town for you both on main street and wall street:

• Save and preserve your assets while you still can and do not use any margin in your trading and investment activities (using margin/debt to invest is not an investment, it is a pure speculation since you can not control the outcome; the market does control you in the short-term). Remember these words in your heart: focus on capital preservation and margin of safety.
  
• Use your common-sense and think long-term only for less-risky assets that have high possiblity and probability to be materially higher 5-10 years from now based on conservative facts and assumptions, not hope (hint: never invest in companies with lots of debt level and need to borrow short-term money to operate). There are assets that could go down irreversibly.
• Ensure that you are not fooled by either fear, greed or short-term thinking, especially with your retirement accounts and college fund accounts for your kids (if you have ones). This requires you to be conservative while you can still afford to.
  
• Change before you are forced to do so at much less favorable term than what you could get now. If you have losses, the past is over. You need to think about what it is now based on facts and what the future might hold for you also based on facts and conservative assumptions as well as your personal situations. Remember that having zero or negative asset value is miserable and certainly a destiny you want to avoid. The global bear market and recession this time appear to be a painfully long-one. Hence, remember that investment risk is degree of possiblity and probability of your investment experiencing permanent loss of capital.
  
• if you have tons of cash, spread the money to multiple financial institutions with very miminal exposure to credit market (I will not name them for the sake of being neutral)
• if you have little cash, then there is nothing to lose for you. Just continue with your daily activities and start increasing your saving habit and spend wisely.
  
• be patient, enjoy your life, don't be stress, and focus on your health, family and friends, not just money. Stay conservative and sail the current crisis patiently.
• start your own business if you haven't and if you are able to, as it is the only way that you can control your destiny and success and there is really no better time than now.
  
• if you like your current job and still have your job, ensure you are still fully employed as the job market is now very slow and scarce. If you need to find new job and find it difficult to get one, lower your bar as there are plenty of basic jobs that are both educational and interesting. Any jobs will teach you various ways of life especially the way to survive. Remember these stories:
  • The late Sam Walton, founder of WalMart once worked for JC Penney before he opened his own store in a very small town in America. The rest is history.
  • Wilbur Ross, a billionaire investor who made his name patching together the remnants of dying U.S. industries like textiles and steel, started his first own distressed investment fund when he was 62 in year 2000 and became billionaire when he was 67 in year 2005. Now in 2008, he is worth an estimated $1.7 billion according to Forbes.

• do not equate yourself to Warren Buffett or George Soros or any other investors. You are not them. Their methods can work only for them, their situation and their characters. If you follow their methods without realizing and understanding your very own situation and characters, you could easily be burned by the market quickly and painfully. Learn their principles and wisdom but always design your own investment strategies and principles that really work for you and your current situation. This requires you to think like an agile and adaptive businessman/investor.
• always be innovative, apply common-sense, and keep things simple; Human race is a massively capable race. If you believe in yourself and listen to common-sensical wisdom and principles, you will always be able to design/find solutions that fit you/your family/your companies to sail or even to stay on top this current global financial crisis successfully.
• investment survival is more important now so that you can still invest later; if you have nothing left now, you will certainly need to endure a much harder, longer effort before you can even start growing your assets.

To move forward, you need to understand, learn, and accept the past and the present. The future is always brighter for the prepared ones. Patient investors and business people shall be rewarded in the long-term.

"I don't look to jump over 7-foot bars: I look around for 1-foot bars that I can step over." ~ Warren  Buffett