Monday, October 6, 2008

Panic sets in

We are now entering the panic zone. Investors all around the world have joined in the panic. Treasury has its bailout authority, but no detailed plan yet. I think it's overdone. I think the bulk of the losses have been taken, and assistance is right around the corner. But in the meantime the uncertainty is killing people.


Jon S. said...

Scott -- what's going to happen next this week? Are we at or near the bottom of the market? If nonfinancial commercial paper credit is still flowing freely, why the continued sell-off?

Scott Grannis said...

Treasury and the Fed are bringing out the big guns now, and that will be what everything is about. That they have been reactive rather than proactive, and have not moved quicker is really unfortunate, but the market has been too quick to panic. People are thinking that the economy will grind to a halt, and there is no evidence that is happening.

CDLIC said...


The UK's Telegraph published an excellent article (10/05/08) regarding the financial crisis now taking place in Europe titled 'Financial Crisis: So much for tirades against American greed'. From the article:

"It took a weekend to shatter the complacency of German finance minister Peer Steinbr├╝ck. Last Thursday he told us that the financial crisis was an "American problem", the fruit of Anglo-Saxon greed and inept regulation that would cost the United States its "superpower status". Pleas from US Treasury Secretary Hank Paulson for a joint US-European rescue plan to halt the downward spiral were rebuffed as unnecessary. By Monday, Mr. Steinbr├╝ck was having to orchestrate Germany's biggest bank bail-out, putting together a €35 billion loan package to save Hypo Real Estate. By then Europe was "staring into the abyss," he admitted. Belgium faced worse. It had to nationalise Fortis (with Dutch help), a 300-year-old bastion of Flemish finance, followed a day later by a bail-out for Dexia (with French help."