Fall… fall…. free for all………………. November 12, 2008Posted by nsworld in Business and Economy.
Business confidence index, CEO confidence index, Bankers confidence index, and the likes, suddenly have come to the front pages of business newspapers. My leisure hours during the last fortnight was spent on reading and listening to various views and perspectives on possible reasons, whether systemic or non systemic, for the current Global financial chaos.
On the face of it and according to most analysts, economists and bankers everything started with subprime and the related CDOs.(which now appears truly to be the financial weapons of mass destruction)But one can’t also ignore the preceding bubble in the commodity market from oil, cereals, yellow metal to iron. What made the commodities to hot up? Excess liquidity in the system?, famine in some parts of Africa, or Australia or the excess encouragement given bio fuels which lead to drastic reduction of acreage under food grain cultivation, or the 7+ growth rate of Asian economies.
Is it the Americans` penchant for consuming more than they were producing, or the dominant role of US dollar as the global currency, which brings with it the inherent risk of being targeted every time there is crisis of confidence.
Am still confused even after reading reams and MBs on this, every other possible reason for the crisis is leading to another more possible and bigger reason which might have triggered today’s catastrophe.
During pre election rallies and speeches Obama squarely blamed it on Republicans, John Mc cain had all the regulators at fault for the fiasco. But only few are speaking about those celebrated Credit rating agencies which gave highest investment rating to all those infamous Investment bankers till the day they filed for bankruptcy.
Some said, greedy Banking and financial service providers and their Financial engineering to be blamed, while some had faulty policies of central bankers across the world who couldn’t foresee the crisis in the making.
So jury is still out on the issue of possible reasons, but as of now its all fall and free fall for all from stock markets, financial services, banking, stock broking, software, commodity, automobile, iron and steel, construction, realty, media, entertainment to the next door kirana shop.
So don’t think chicken or egg is the one difficult question to answer, because Economics has plenty of such questions or all question are of that type!!!!!