I have been 'delayed' posting this article.
Below is what I wrote back in Sep :
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Since the financial crisis outbreak in Sep'08, (some analyst has dubbed it Black September - in analogy to the US Market Crash one Black Monday in October of 1987), so much has happened.
Below is the summary of the chronological events that led to the meltdown :
March 16: - Struggling Wall Street investment bank Bear Stearns is sold at the fire-sale price of 236 million dollars to JP Morgan Chase, in a deal engineered by the Federal Reserve.
September 7: - The US Treasury takes over shareholder-owned mortgage finance giants Freddie Mac and Fannie Mae and guarantees 100 billion dollars of debt for each institution.
September 15: - Venerable Wall Street investment bank Lehman Brothers files for bankruptcy protection after the US government refuses to bail it out. - Rival Merrill Lynch hastily arranges to be swallowed up by Bank of America for 50 billion dollars. - Credit rating agencies downgrade the debt of American International Group (AIG), the largest US insurance company, and its share price plunges 60.8 percent, deepening earlier losses. - The Federal Reserve pumps 70 billion dollars into the markets. - The Dow Jones Industrial Average plunges 504 points, or 4.42 percent, its biggest one-day loss since September 2001. London's FTSE 100 index dropped 3.92 percent, the CAC 40 in Paris fell 3.78 percent and Frankfurt's DAX sheds 2.74 percent.
September 16: - The US government rescues AIG with an 85-billion-dollar loan, giving the US government a 79.9 percent stake in the company. The Fed injects another 50 billion dollars into the markets.
September 17: - Stocks plunge again amid the economic uncertainty: the Dow slides 449 points or 4.06 percent. The Securities and Exchange Commission (SEC) bans some short selling of financial shares.
September 18: - The Fed and global central banks pump 300 billion dollars into credit markets. Stocks rally on news of a broader US government bailout; the Dow jumps 3.86 percent. - US Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke begin talks on a huge plan to buy toxic mortgage-related assets from troubled financial institutions. Reports of the discussions send the Dow Jones average up 410 points.
September 19: - US government asks Congress for the ability to buy 700 billion dollars in bad mortgage-related debts, one of the biggest financial rescue plans in history. The Fed pumps another 20 billion dollars into the credit markets. Stocks soar, with the Dow up 3.35 percent and Paris and London indexes surging 9.27 percent and 8.84 percent, respectively.
September 21: - The Federal Reserve announces that Goldman Sachs and Morgan Stanley, the last big independent investment houses on Wall Street, were turning themselves into bank holding companies subject to greater regulation.
September 24: - Republican Senator John McCain announces that he was suspending his presidential campaign to join tough negotiations in Congress over the government's bailout plan. His Democratic rival, Senator Barack Obama, declines to follow suit. - President George W. Bush gives a nationally televised speech warning that the "entire economy is in danger" if Congress does not approve the bailout. He invites McCain and Obama to a White House summit on the crisis.
September 25: - Lawmakers announce "fundamental agreement on a set of principles" for a rescue plan, but talks then deadlock due to opposition from conservative Republicans. The White House meeting ends inconclusively.
September 26: - Washington Mutual (WAMU) collapses in the biggest US bank failure to date. JPMorgan Chase purchases parts of WAMU for 1.9 billion dollars.
September 28: - Lawmakers hail breakthrough in talks, releasing draft legislation for a phased bailout beginning with purchases of 250 billion dollars in toxic debt with the possibility of expanding to 700 billion dollars. Deal would impose curbs on executive pay and introduce strict oversight over the plan.
September 29: - The House of Representatives rejects the bailout plan by a vote of 228 to 205, with Republicans leading opposition to the deal.
At the time of this writing, the US Senate has approved a revised bailout plan & now pending the approval at the Lower House, of which the Senate is quite confident of it being bought-off.
Over the past 1 month, DJIA has dropped from almost 12,000 pts to currently 10,700+ pts. All other major bourses in Europe & Asia experienced similar downtrend. Billions of dollars were "lost" ...or at least paper-loss over this crisis.
Critics of the US financial bailout are skeptical .... US$ 700B is a huge amount .... where & how on earth, can the US government raise this fund ?! ... knowing fully well, that they have been on trade & budget deficits for more than a decade.
Time to 'panic' ?? ...... depends on which school of thought you belongs to .... most folks will have the fear factor taking charge by now.
Others will see that an opportunity is presenting itself ... The Chinese has a word for this kind of situation ... 危机 ... the first character means "danger/crisis" while the 2nd means "opportunity". Put them together, it loosely means that there's always opportunities behind every crisis.
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However, Oct'08 proves to be the Achilles heel of the the US & WW economies. The meltdown accelerated & DJIA as of 10/10, closed at 8,451 .... down from abv 10,000 end of Sep.
Likewise for major bourses across Europe/Asia .... FTSE100, DAX 30, CAC 40, Nikkei, Hang Seng, KOSPI ... tumbled 18% (on avg) in the first 2 weeks of Oct.
So much for a Perfect 10 (Oct 10th) ... Ironically, our very own KLSE proves resilient with a drop of only approx. 7% over the same period. Perhaps we have some divine intervention as 10/10 happens to be the 1st anniversary of Malaysia's Astronaut Day.
Man ... I hate it ... the prophecy of a Financial Tsunami (from my earlier article) seems to be marching towards reality. The Million Dollar Question now is .... how much further would be the avalanche ?? ... and what's the worst impact towards the well-being of the man-in-the-street ?
While there is some consolation in that the crude oil prices has reduced to below $90/barrel, this effect does not ripple through to the local commodities. Prices remains "sticky".
On a macro-view, my take is ... there'll be another round of large scale downsizing and a couple of Mergers & Acquisitions (M&As) taking place this Qtr. Singapore is now officially in recession. By Nov, the recession "bug" would spread to the rest of SEA economies & by Dec, the Greater China region would succumb to it. In a nutshell, the whole world may be in recession by Christmas.
And ... what has this gotta do with football ? ... remember the AIG scandal ... they happened to be the main sponsor of ManUtd FC. I predict that they will withdraw the sponsorship soon. Chelsea may see a dearth of $$$ coming thru' as Roman Abramovich's fortune has also dwindled by trillions over the past 2 months.
Hmmm .... wonder if C.Ronaldo or Rooney can still get their GBP150,000/week ;-)
