Dear Upi,

Let me remember what points I should reply from your previous letters. There are a lot of things you wrote. I remember you mentioned about those stock-market crashes that may pull down the worldwide economy.

Yeah, the United States - currently the world's largest economy and the destination of many world's exports - may be on the brink of recession. But at the same time, the emerging markets like China and India - after a remarkable five-year period of spectacular growing - are showing signs of what economists call "decoupling" - that means, even as the globe's economic engine, the United States, has stalled, these emerging markets may finally be able to stand strong on their own power.

The problems that the United States is facing now, started with excesses and defaults in the subprime lending and housing markets. The housing market bubble burst, foreclosures mounted, and housing activities stopped. As subrpime debt went bad, the lenders and banks that plunged into the subprime market suffered huge losses. Blue-chip banks such as Citigroup and Merrill Lynch had to take huge write-downs - more than $30 billion - on subprime mortgages and investments tied to them.

With tighter credit supply, consumers who account for 70 percent of U.S. economy began to scale back, and thus, leading to an economy slow-down. This "disease" spreads around like financial mold. The economic conventional wisdom holds, if the United States sneezes, the rest of the world will catch a cold.

However, more and more business people and economists think the United States and the rest of the world may now be moving in different directions. The world is seeing the signs of a general decoupling, while demand is weak in the U.S., there are still signs of strong commodity-based exports in other emerging markets in Asia, Eastern Europe, South America, or Russia.

The worldwide economy map is changing. Even China has now displaced the U.S. as India's largest trading partner. China has its own strong domestic demand. The failing demand for exports to the United States will only slow down China's growth a bit, from 11 percent to around 10 or 9 percent. What used to be the world's strongest financial system is now at its weakest, while those emerging economies seem to be very healthy. Emerging markets today consist of half the global economy.

Therefore, many people believe that the world is not facing the Great Depression II. Yet. I also believe it won't be as bad as, or even close to what happened in The Great Depression in 1930s.

Though the big question - whether the current slow-down of U.S. economy would turn into a worldwide slump - is still hovering above our heads, one thing is sure: the rest of the world will still cushion America's slide. At least, up to this time, the U.S. is still the largest economy in the world, and the world still needs to protect various interests in this biggest market.

But, how does the world bail the U.S. out?

As the U.S. economy slows down, the emerging markets especially the fastest-growing economies in the world - China, India, Brazil - appear set to continue with their robust growth, and there are no indications that other countries are tumbling. Those emerging markets will continue to expand - to buy, sell, and trade - and in the end, this will help the U.S. economy. Even the U.S. dollar's decline would in the end make American exports more affordable across the world. The cheap U.S. dollar would also encourage tourism and investments in America from foreign companies and individuals.

Just look at who are helping the U.S. now. The world's energy-rich countries that profit a lot from the soaring gas prices like Kuwait, the United Arab Emirates, or Saudi Arabia have been infusing funds to otherwise desperate American financial firms. Add other countries to the list, such as China, or Singapore, or Japan, that have huge surpluses, or savings, or sovereign wealth funds. These pools of capital need to be invested somewhere. And why are these pools of fund still coming to the faltering giant? Because, strengthening the faltering giant might mean stabilizing the whole system. Without the infusion of these pools of fund, many of U.S. banks and financial companies would have gone bankrupt, triggering floods of gloom across the country.

Having said all of these - we still need to say it bluntly: yes, even though the world is still helping the U.S., there is definitely an ongoing shift in the global economic order. Yes, the economy power is moving away from the traditional centers of the global economy - the Western nations - to the emerging markets. Yes, the U.S. is in the beginning of a period of decline.

It is NOT a steep decline, but yes, it is happening slowly.

It is more like, when the British Empire slowly lost its number one, leading position in the world at the beginning of the 20th century, and suddenly it couldn't claim that famous phrase "the sun never sets in the British Empire" again. It is like when the Ottoman Empire crumbled and lost its leading position in the world, and became "the sick man of Europe" in the late 19th century.

Yes, it is happening, though it won't be dramatic or miserably hellish.

Besides, for some reasons, the emerging markets still need time to catch up with the stumbling giant. Being in the world leading position for a century, the U.S. has built somewhat structured and matured systems and infrastructures. Even the stock market in the U.S. has been much more matured and diverse, as compared to the ones in Europe or Asia which are still dominated by family or majority shareholders. The movement of funds in the Wall Street, therefore, is much more fluid and flexible as compared to the ones in Europe or Asia. All of those are interconnected, though. For example, IBM's stock prices have been soared in January because the company has been boosted by strong sales in emerging markets and the ailing U.S. dollar - which make money earned abroad more valuable.

Okay. Now, let's not be gloomy. Even though we may lose some money in this life, we have to make sure that we gain something that is much more precious than money - whatever that is. Make sure your investments spread diversely at reasonable risks, okay?

***

Source: BusinessWeek, January 28, 2008., Newsweek, February 4, 2008. Picture is from photobucket.com. The original letters are written in Multiply.com.

Dear Sri,

I was dumbfounded when you asked me to write my new-year resolutions. Oh, no. It's already December again. It is when many people are "trendily" preparing their new-year resolutions. But I realize I am not that good at keeping promises I make to myself. I've been such a mess the whole time.

Yes, I do have some personal goals. In fact, I have kept my list of personal goals in a big book, which I update from time to time. The list keeps getting longer and longer. But I hide it from my husband secretly, because I hate it when he teases and makes fun of my resolutions! He always loves doing it with sparkling, mischievous smile on his face.

When I visited our college in Bogor this year, I met with our friend, Evi, who is now becoming a professor there. She happily teased me in front of my husband. "Does Amy still make her daily schedule? Daily itinerary? Hourly plans? Does she still make a long list of personal goals?"

And Har bursted out laughing. "She does! She does! You really know her, right?"

You bet. I am that kind of person. I actually have hundreds of personal goals. Some of them are just simple things, such as "call a friend or family every other day", "read a good book every week", or "eat healthy diet." But, I have a quite number of bizarre goals as well, such as "own a beautiful house on the bank of Swan River, Perth, Australia", or "establish an internationally acclaimed wellness-center", or "write my international best selling books".

And please, don't laugh. By writing and visualizing what I want in life, I have achieved some quite number of victories, too. I usually make remarks on every achievement and put a new goal next to it. For example, when I wanted to visit Paris, I wrote it as one of my goal on the list. I put a certain deadline for each goal. When I happened to achieve my goal of visiting Paris, I would remark "victory"! Then, if I still wish to revisit Paris again in the future, I would write another goal as "visit Paris for second time", or "visit Paris for third time", etc.

Indeed, I prove it myself - the power of visualization and the power of mind, work. When I have the time, I'll write you about this sometimes. But in the mean time, here are my eight resolutions as per your request:

1. Walk on God and Humanism Principles.
2. Make friends.
3. Keep my promises.
4. Exercise daily.
5. Eat healthy diet.
6. Read at least one good book a week.
7. Write at least one good article a week.
8. Be organized.

I originally posted this letter in Multiply. The picture was taken by me - it is a lighted signage of Hello-Kitty celebrating a new year. I took it at the Taipei airport several weeks ago.