The mood after Monday’s Lehman Brothers’s collapse is at best described as sombre. Employees and investors find themselves in the midst of uncertainty overshadowed with worries of losing their jobs or money. And all they can do now is wait. Wait for a lifeline from anyone and pray that this crisis will be over soon. Only one thing is certain in this difficult time - we have not seen the full potential of this economic catastrophe. The underlying problems of banking and investment fundamentals, consumer confidence as well as inflation are all yet to be resolved. The worst is yet to come.
The fact is that the scope of the crisis has exploded beyond the governments' control. To soften the effects on the market, the Central Banks of United States, Europe and Japan each injected billions into the market but it is unlikely to be significant enough to restore the loss of public confidence. To make matters worse, AIG, which has sold $441 billion of fixed-income assets to Wall Street’s top firms and the biggest companies in Europe and Asia, got hit by news of its ratings cut and lost as much as 74% of its trading value in New York today. AIG is so widely tied to assets and financial products that its collapse would trigger a domino destroying the whole global financial system. In this widespread chaos, no one has any idea what to expect.
Then, sooner or later, after enough dominoes have fallen, the market will learn to be conservative once again. People will learn that greed may pay off in the short run but will only end in self-destruction. So the pain will accumulate making sure we don’t forget anytime soon. We learn from our mistakes and move on. Matured.
The fact is that the scope of the crisis has exploded beyond the governments' control. To soften the effects on the market, the Central Banks of United States, Europe and Japan each injected billions into the market but it is unlikely to be significant enough to restore the loss of public confidence. To make matters worse, AIG, which has sold $441 billion of fixed-income assets to Wall Street’s top firms and the biggest companies in Europe and Asia, got hit by news of its ratings cut and lost as much as 74% of its trading value in New York today. AIG is so widely tied to assets and financial products that its collapse would trigger a domino destroying the whole global financial system. In this widespread chaos, no one has any idea what to expect.
Then, sooner or later, after enough dominoes have fallen, the market will learn to be conservative once again. People will learn that greed may pay off in the short run but will only end in self-destruction. So the pain will accumulate making sure we don’t forget anytime soon. We learn from our mistakes and move on. Matured.
1 comment:
welllll...the pain is easily forgotten...once it's all over...and I mean ALL over...When the repercussions can't be found in plain sight anymore...People will find a way to forget...Trust me. That's how dumb people are...Especially because of the way the education system is, most kids who didn't experience recessions and depressions first hand just do not understand what it is all about.
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