The euphemistically termed "meltdown" in the financial world is really a crisis of enormous proportions.

"The world's central banks launched a large coordinated attack against the widening global financial crisis, lowering short-term interest rates in unison. The emergency action, which involved the Fed, the European Central Bank, the Bank of England and others, is a sign that fears that the financial crisis could cripple the global economy are spreading rapidly" - Wall Street Journal

"Fed Can't Stop the Bleeding. Global Markets Remain Strained" - Fox News

"The US treasury secretary has warned some banks will still fail despite the $700bn government rescue package to shore up the financial system. The UK government has announced a package of measures aimed at rescuing the banking system that makes available £400bn ($692bn) of fresh money - BBC News

"Fed can't save stocks. Wall Street ends a volatile session with losses as investors welcome emergency rate cut but remain wary" - CNN News

"Market turmoil continues despite rates cut.  IMF says global economy faces a painful recovery"  - France 24 International News

"China cuts rates to ward off slowdown. IMF: World economy to slow sharply, led by US" - China Daily

"Economic Crisis will not be televised. Elite Nightclubs Empty as Crisis Hits Oligarchs" - The Moscow Times

"Blame bad rules, not capitalism" - The Jerusalem Post

These were the headlines splashed across the internet on October 8, 2008.

The harsh reality is that despite concerted and co-ordinated efforts by governments around the world to stabilize the situation, confidence in the global financial system has been smashed. I think it's time for everyone to take a step back from the clear panic in the stock markets, take cognisense that the credit markets do not respond overnight, and give the system a chance to respond to the drastic measures taken by governments around the world.

Remember: "This too shall pass."

 
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11 Comments on The 2008 Financial Meltdown - An Unimagined Crisis

OCT
09
2008
129,765 Points 1 Featured Post Outside Blog

I think that your advice to take a step back and try not to succumb to a panic that is fed by fear is really important. Not succumbing to fear means that the ability to stand back and asses a situation and a way forward is possible. Fear and panic obscure all paths.
2:08pm • #1
458,729 Points 27 Featured Posts Outside Blog Called Shot Master

2004: "Not only have individual financial institutions become less vulnerable to shocks from underlying risk factors, but also the financial system as a whole has become more resilient." - Alan Greenspan (Federal Reserve Chairman 1987-2006)

It's clear that no-one, not even the so-called experts, know with any certainty how financial markets will react to news. Today's huge drop in the Dow, S&P and NASDAQ is contrary to what was expected after the release of news that world governments had worked in unison to lower interest rates.
3:40pm • #2

Thank goodness McCain suspended his campaign a couple of weeks ago to fix our economy. If we had a dollar for every time this man has stated that he reached across the aisle, we could pay the national debt.
3:55pm • #3
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Fear is the factor that we can't give into. Now is the time to seek out and find the investors that want the security of their investments in real estate.
4:19pm • #4

Would have been nice to be short the past few days. Things go down alot quicker than they go up.
11:11pm • #6
OCT
11
2008

I thought you did a great job in capturing the market sentiment in your quotes. I do believe that "this too shall pass." I also agree that fear and panic are contributory in the downward spiral. I'm just having a heck of a time trying to put this mess into a time frame. I keep coming back to that conservative approach where the market value of property can actually be supported by per capita income. And I fear, getting there will be messy, contentious and painful for many.

 
9:28pm • #8
OCT
13
2008
458,729 Points 27 Featured Posts Outside Blog Called Shot Master

10/13/08 - The Dow Jones posted its biggest point gain in history today. It surged over 900 points on the day. The S&P and Nasdaq posted equally impressive gains.

Last week people were scared to be in the market, and this week people are scared to be out the market.

FEAR & GREED ...... Remember: "This too shall pass."
3:09pm • #9

I can't wait to see what this does to oil prices.
4:21pm • #10
1,013,694 Points 4 Featured Posts

I wonder where the slogan came that says THIS TOO SHALL PASS came from. What a motivational sentence.
5:30pm • #11
458,729 Points 27 Featured Posts Outside Blog Called Shot Master

Charles - Click on the saying in the post and there's a link to the history of these great words.
5:51pm • #12
OCT
18
2008
458,729 Points 27 Featured Posts Outside Blog Called Shot Master

The Wall Street Journal has a great piece titled "Take a Deep Breath, Turn Off the TV, Calm Yourself" - about how to avoid panic selling and the "herd mentality".

So many people I talk to tell me how they're buying on the rebounds and selling in the dips, displaying the panic that this article refers to. It's worth reading.
9:50am • #13

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Stewart Penn - DRE# 01339266

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