Following on the recent demise of financial powerhouses the like of Bear Stearns, Lehman Brothers, Fannie Mae, Freddie Mac, AIG, Northern Rock and Merrill Lynch, the question has to be asked how many more financial institutions are on the precipice. Once we know this, is the cookie jar of multi-billion dollar bail out funds made available by the Federal Reserve and other Central banks nearly empty? Every week we hear of hundreds of billions of dollars being pumped into the financial markets which seems to calm frayed nerves for a while, then another tumbling collossus emerges. The last question is how will all of this affect Joe Public? The immediate effects are tumbling property prices around the world as the criteria for obtaining a mortgage are now tightened up. Pension funds have been hammered by stock market correction after correction. The long term effects are yet to emerge but my guess is that its not going to be pretty. Any activity which requires credit is going to get expensive. This is going to effect your plans to buy that new car, your employers plan to invest in new equipment, your governments plans to operate a trade deficit to get out of economic recession. Unbridled capitalism, or what some call greed has led to this situation and no doubt new rules and regulations about how Capitalism works in the future will be introduced. Lets hope we get some inspired leadership to help as all weather this storm.
Friday, September 19, 2008
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