With the massive international deficit, U.S. is using other people’s money to profit and enjoy life. Just like a start up company would get loans and investments from Banks and private investors. Differently in the case of the entire nation borrowing as a whole is that because the deficit is so huge and because of the confidence the world has in the U.S. economy they are relectant to realize any of their debts. Imagine, if all the nation who owns U.S. treasury note all come together and ask for their money, then U.S. would be the bank that’s going bankrupt. It’s not going to be pretty. Good thing to know is that there is little chance of this happening because so much of the world’s economy is depending on the spending powers of the U.S. Basically when U.S. falls, the world is coming with it.

One thing positive about this turmoil is that during panic times, some valuable stocks are undervalued. For example, Morgan Stanley and Goldman Sach are doing relatively good (Not so hard compare to others in the sector). Though they are not in any type of immediate trouble, their value tumbled based on the lack of confidence. So it’s times like this investors can get bargain deals on good stocks. This is evident when after a disasterous fall in the market, it had a historical climb in the next few days.

In conclusion, the economy is going to operate based on credit for sometimes. Since we already know it’s going to come with booms and crashes, let keep in mine that after crashes a boom should follow. Instead of panicking, we have to keep cool and find the hidden value coming around the next corner.