Originally posted by space cadet
Well it is now october 8th, and I am fine, no terrorist attacks or major natural disasters took place in my neck of the woods on the 7th, but the
ominous feeling of financial disaster has really kicked in today, perhaps the web bot was predicting the begining of the real end of our financial
system globally, begining with the Iceland banks.
yes, it seems that the feeling of financial disaster really began to kick in on Oct 7. Some symptoms were that the Australian Federal Reserve Bank
announced a 1% rate cut (for the first time in 16 years) and others began to follow, the PM of Iceland went live on international TV and announced
that his country was virtually bankrupt as their 3 major banks' debts were so massive the govt. there couldn't possibly bail them out (so they began
nationalizing them instead), and the UK govt began its efforts to organize an "unprecedented" bailout of its banks.
Then on the 8th we saw that these efforts had little effect on the markets. We also saw that the coordinated actions of many Central Banks to cut
interest rates also did not put the brakes on the slide. Even the US Fed's "emergency" 1/2% rate cut had no positive impact. By the 9th,
realization had finally dawned that the various governments' measures were simply not being effective, and that led to even larger drops on Friday
10/10 in the Asian markets. (Falls of around 9% across the board.)
It looks like most people who invest in the various markets don't believe that their governments can halt this crisis, and frankly they are
panicking. The European markets are now open and they are doing very badly. The German satellite channel N24 is calling it a "black Friday for
European Markets". As I write (more than 2 hours after the markets opened here), Germany's DAX is down more than 10% and still dropping...
In a little under four hours from now, the US markets will open, and unless the US Govt/Fed does something quite extraordinary, it looks like we can
expect that Wall St will go the same way.
I'd say that the Web Bot got it right: Oct 7 was certainly a key day in world markets, but the realization of how much (or little) government
intervention could do to allay people's fears did not really hit until Thursday -- and today's reaction in markets around the world is the result of
Is this the beginning of the end of our financial system globally? I don't know and I doubt that anyone really does. But even if the system
more-or-less continues in its present form, most experts say that the recovery will take a long time. Most cite two to five years as a ballpark
figure. Meanwhile, we are already seeing the effects.
A word for anyone regarding the various government guarantees to protect your bank accounts. Now, this is only my take on things and I could well
, but this is how I see it: while they might hold to those guarantees, that doesn't have to mean that if your bank (open or shut down)
has no cash to hand over, that the government of whatever country you're in will cough up the readies straight away. They might give you a percentage
of your money and provide you with some kind of document that promises you the rest after a period of time. They might say that they're sorry, but
the problem is so huge that nothing can be done to help you right now. They might even call an early election (where that's possible) or impeach/vote
out/depose their leader(s) so they can hand the whole sorry mess over to whoever takes power, so that the former leader(s) can get out without being
torn apart by lynch mobs. They might start a war on some pretext to divert people's attention and "pull people together to save their nation" or
whatever line they use.
Lord only knows what they might do.
But to just say "Okay, we promised to cover your bank deposits so we've borrowed the money from abroad and
here it is."
Borrow from whom
, when every major economy is in the same sinking boat and most have given the same guarantees? And if they
just print the money (which of course they can), inflation will go stratospheric.
We've had some people on this thread who've claimed that "nothing unusual" (or words to that effect) happened on Oct 7th or in the days around it.
I say to those people: the Dow has taken the biggest 7-day hit in many years, the drops on other markets are similar or worse, the combined efforts of
many central banks to announce simultaneous rate cuts is unprecedented, the economic "fear index" is at its highest level ever, the UK govt has
announced a bailout of its banks at levels never before seen in that nation, the PM of Iceland has stated publicly his country is virtually bankrupt,
the US Sec of the Treasury Paulson has stated the Govt may directly buy shares in banks (which amounts to partial nationalization), the effects of
this week's events are being compared in some media reports to the reactions post-9/11 -- and the list goes on and on. All in this week!
I have been closely following the markets for twenty-one years, since the '87 crash when I sat up and really began taking notice. I have never seen
things this bad and the emotional tensions so high. I have never before seen hardened commentators and experts looking so (frankly) scared.
If you have, then you must be around ninety-plus years old and you are able to fully recall the events of 1929.
So, could you nay-sayers please explain your assertions that this is nothing unusual, that things like this happen every day, and that the Web Bot's
predictions are wrong and we are just using the present events as an "excuse" to show it's right?
[edit on 10/10/08 by JustMike]