For every news story, in particular the recent global financial crisis, there also is another side of the story that doesn't get any attention and needs to be told.
There are at least five benefits of the recent crisis that will be realized even though the overriding fear has been so easy to express and gets all the media attention.
- 1. The European Central Bank stepped up to the plate ( when not expected ) and made a massive injection of cash to the tune of $130 Billion at a low fixed rate of 4%.
- 2. Too many hedge funds were launched and they relied on very poor trading systems. The credit crunch sorts out the real innovators of the hedge funds group that have expanded their range of assets and they help provide liquidity in obscure markets.
- 3. The leveraged buyout firms will now have to do a much better job of managing their accounts. It seems that the crunch showed up their weaknesses and this exposure will force them to work harder to improve.
4. Sanity will slowly return to the housing market. No more housing boom being created with cheap credit. The purchasers will now once again have to prove their qualifications and this will make sellers be more realistic in how they supply the market with their properties.
If the sellers bring garbage to market now, the buyers with their tighter credit guidelines will only
be willing to pay garbage prices. A more normal market will prevail.
5. We have been discovering the source of all the debt. We will learn in the months ahead whether the globalization of the markets assists or prevents their ultimate healing and how much each players' influence actually matter.
Doom and gloom that has been touted over and over and it seemed to be the only story the press wanted to sell. But the financial leaders know that this crisis also had a beneficial catharsis of sorts that may prevent or at least will go a a long way to in curbing this type of crisis in the future.
I think the big thing is sanity will come back. I believe the market will do well again, but in a more responsible manner.