At least that’s the impression I get reading the financial news these days. World changing events are occurring and it is not exactly easy to sit back and watch completely detached…
Anyway, no matter what the stock market does, one thing is for sure, Wall Street will never be the same.
It has been interesting reading some of the guys who have seen this coming all along. They saw this coming but their recommendations have been mostly wrong up to this point despite their solid grasp of the economy and foresight. At first the great fear seemed to be deflation with the flight to the dollar but after the latest round of bail outs, it seems that inflation is our greater enemy… and a flight to gold. Maybe next week it will be deflation again.
The US government has taken an unprecedented role in the markets. They have not only bailed out companies as they did Chrysler, S&L’s etc. in days gone by, they have nationalized mortgage lending and assumed massive amounts of debt in the process. Interestingly, the US Gov’n could stand to benefit by having purchased these notes at greatly discounted rates. But as potential beneficiaries of the market the US Gov’n now has a direct interest in seeing real estate prices stabilized… otherwise their debt burden only increases. (by some some estimates to 2 trillion)
Some have highlighted the dangers associated with the govn’s latest interventions. Now the institution that has the power to make law also has a direct vested interest in the market. But then again, you could argue that it wouldn’t have benefited anyone if the entire financial system collapsed. I don’t envy central bankers these days.
Here is an interesting quote,
“The eruption of the U.S. sub-prime crisis has exposed massive loopholes in the United States’ financial oversight and supervision,” writes the commentator, Shi Jianxun.
“The world urgently needs to create a diversified currency and financial system and fair and just financial order that is not dependent on the United States.”
Not sure how the Chinese say this with a strait face when their own economic policies are not exactly sound either (to put it mildly!).