MR ALAN Greenspan said last week that he has lost faith with free markets. Well, I started with little faith in him and the market, and my sympathy greatly outweighs any respect I ever had for both right now. Last Thursday, I tuned in to check out the grilling he took from the House of Representatives Committee as he was pinned with the blame for the pit hole America is in.
He was the revered One. He was the most powerful central banker in the world. Markets moved when he spoke. His proclamations were taken as the ultimate reassurance, the cure to all status ailments. “No, there's no bubble in the US housing market, it's just some "froth" and “Yes, the US financial system is sound and all those complex financial derivatives spreading around the world is just a healthy distribution of risk.”.
Apparently, the bubble that didn't exist burst, and derivatives turned out to be the link that tied the financial world together so that as one falls, we all fall. We look to Mr Greenspan again and this time he is no longer the almighty maestro of the financial world. So he humbly retracts, “well, actually, the Fed has no way of spotting bubbles in real time and, anyway, it's more effective to mop up afterwards than to try to deflate a bubble before it bursts.”. Last Thursday, Greenspan admitted that his belief that markets should be left free to regulate themselves was 'flawed'.
He admitted he was horribly wrong. But that does not help us.
Some US$16 trillion (S$24 trillion) or about 80 per cent of the value gained by stocks worldwide in the last five years has been wiped out in less than year. The biggest of banks have gone under. Several currencies and emerging market economies are on the brink of collapse. The whole world is in a deep recession whether they admit it or not.
On a positive note, the greenback has been gaining ground as unified efforts since the G7 meeting two weeks ago pushed down their own currencies to boost the US dollar. In doing so, they hope to accomplish two goals. First, rebuild lost confidence in the US economy. Second, revive foreign export to the US and curb inflation. Japan is the sole exception as their currency has long been the source of carry trading and as people rush to cover their position now, the Yen can only go up.
Two things are certain in this time of uncertainty – a coordinated global effort is required to counter this crisis and recovery time will be slow.
He admitted he was horribly wrong. But that does not help us.
Some US$16 trillion (S$24 trillion) or about 80 per cent of the value gained by stocks worldwide in the last five years has been wiped out in less than year. The biggest of banks have gone under. Several currencies and emerging market economies are on the brink of collapse. The whole world is in a deep recession whether they admit it or not.
On a positive note, the greenback has been gaining ground as unified efforts since the G7 meeting two weeks ago pushed down their own currencies to boost the US dollar. In doing so, they hope to accomplish two goals. First, rebuild lost confidence in the US economy. Second, revive foreign export to the US and curb inflation. Japan is the sole exception as their currency has long been the source of carry trading and as people rush to cover their position now, the Yen can only go up.
Two things are certain in this time of uncertainty – a coordinated global effort is required to counter this crisis and recovery time will be slow.
2 comments:
Hey Poetic',
So, why should all of humanity be forced to suffer and struggle any longer, now that the entire global financial system has been exposed as a mind-boggling deception, within many other deceptions? No one in their right mind would continue to be enslaved by a proven deception, which is also proven to be undeniable slavery-by-proxy !!!
The derivatives scams alone have grown to more than 20 times the entire global GDP (at last counting) and are now failing because the scam/pyramid scheme broke and exposed the deception for all to see. A significant portion of global wealth and power was created and propped-up using these and other now-proven smoke and mirrors and house of cards illusions and delusions.
These deceptions have grown many times larger than the rest of the entire world economy. Consequently, there is no way that all of the world's governments combined, who themselves borrow so-called "money" from other central-bank smoke and mirror deceptions, can solve this debacle, by using more smoke and mirrors money scams. The only solutions they are offering will take centuries to repay, if ever.
Here is Wisdom...
Boy seven, I tried reading your posts but they were long. Haha.
Anyways, there is no denying that the world we live in is build on lies or better known as packaging. While there are obvious ethical issues involved, there are little if any ethical values added to products. Perhaps that is why the laissez-faire ideology is doomed to fail today.
However, that is not to say that there is no hope for a better free market system. Take Singapore for example, they have done well with the free market model with the government having an active hand in regulating the playing field so that it is not manipulated at the exploitation of the public.
We now have a huge global crisis at hand, and countries are doing whatever they can to rebuild lost confidence. Since almost every country is in national deficit, there really is no additional harm in borrowing from each other. yes, they are playing with paper value once again but the important thing is to get the economies moving first.
As for whether people will continue to follow blindly, history has shown us that time and greed will lead many to make the same mistakes over and over again.
As much as my sympathy wants, the world is hardly ever fair. The best you can do is learn to live with it.
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