Last week has been a watershed week in many ways. So overwhelming have been the events that all of us have been taken in by surprise and shock. This will definitely serve as turning point in the history of finance.
Goldman Sachs and Morgan Stanley have been converted to banks, WaMu seized, Wachovia disappeared, Money market funds at below par and the saviour $700BN package getting rejected by senate. It’s tough to digest so much so quickly. Haven’t added the European seizures. For sure it will get real nasty before it gets any better.
The crisis is not only the crisis of credit and liquidity, but of trust and confidence as well.
Corporates and Individuals both are in bad shape. Corporates are not getting money to run their day-to-day operations, forget long term, where borrowing costs are touching the sky. Return hurdles for lenders have gone up. One wants to lend very very safe. Individuals are in bad shape, with retirement savings, education savings and health savings gone. Shares are worth pennies, dividends being cut drastically, Mutual funds way below par, what does one do with the money? Where does one invest or rather keep?
How long with this mayhem continue? How deep and nasty would this massacre be? Till then one is subjected to daily torture and the grind of washing machine.
The land of opportunities no more looks attractive rather looks vulnerable? Their external relations screwed up, their internal situation mussy. I think it will require the leadership of the likes of early US presidents to pull them out of this mess. The greats who have built America will guide as guardian angels and help them come out of this state of confusion and disorderliness.
Suddenly it looks so much better to be in Asia.