POLICY FAILS U.S. NOW AND GLOBAL INSTABILITY
Monday, September 29 is the most hectic day much of the last twenty years on Wall Street that Congress in Washington. Despite the long preparatory negotiations, the U.S. House rejects (with 228 votes against, 205 in favor) rescue package of 700 billion dollars developed by Treasury Secretary Paulson and President Bush. Another vote can be no earlier than Thursday, October 2, to seek agreement on a new text, while in the evening the president authorizes the use of foreign exchange stabilization fund.
A Wall Street news of the rejection of the plan sent the stock market into a panic: the Black Monday market of the S & P 500 fall marks the most wide crisis of 1987, while European stock markets have lost between 4 and 5% on concerns about the soundness of some large banks.
Nobody expected that the systemic failure in America could come from politics, but it's true: both Barack Obama and John McCain are calling on their parties to cooperate, but you lose precious time. Already the delay of a week leading to the closure of Wachovia, the fourth U.S. bank, recorded Sept. 28 at the last minute by Citigroup. The vote on the plan that would satisfy both parties has failed miserably, not only from the right are opposed ideologically motivated against state intervention in the market, but by adding 95 Democratic "no" to consider the package packaged to save the Republican Wall Street and greedy bankers who stole behind the American middle class.
After days of feverish negotiations with Modig the Paulson plan, while the markets remain in a wait state close to fibrillation, Friday, October 3rd the Bush plan becomes law, launching a total floor bank rescue and support the economy of 850miliardi dollars.
But markets no longer believe the assurances of politics: October 6, despite the U.S. plan, is launched, the global lists are facing a new "Black Monday". The global stock markets burn 2.2 trillion dollars, led to falls in bank stocks, oil and telecoms.
TSUNAMI OF OCTOBER TO THE TOP WORLD, ONE YEAR IN BURNED 25 thousand BILLION DOLLARS
Autumn of 2008 for world stock markets is the worst period 1933. The S & P 500 index on Wall Street, believed to be the main barometer of the health of global finance, mark ups and downs on a scale unique in history, and international experts are now well understood that the financial crisis is going to transformed into a global recession.
The Week 6 to 10 October will be remembered for the wave of "panic selling, sales by panic: a real tsunami is not just about Wall Street, but also other major world indices are in deep red. According to the World Federation of Exchanges (WFE), the total capitalization of stock markets around the world marked a loss of just under 21 thousand billion dollars and a half times the U.S. GDP. In the month of September on the bonfire of panic selling has been burned almost 6.85 trillion dollars, bringing the total destroyed to 25 trillion dollars last year.
PARALYSIS OF THE LIQUIDITY UPHEAVAL IN THE EUROPEAN CREDIT
"We all underestimated the effects of this crisis," admits the manager of one of the most important hedge fund in London.
But what has actually deteriorated to such an extent as to rush things?
The price of ABS, that is, the paper built on toxic home loans, for the launch of the week October 6 to 12 has remained more or less the same, and the cost of credit default swap rose slightly, we can not say words that have emerged sudden depreciation in the affairs of other banks.
That system, in the cleaning process, it was still in midstream was known. But the actual bailouts from the state of Fannie Mae and Freddie Mac and the "virtual" AEG, combined with the failure of Lehman, and the collapse of Wachovia, rather than create new liabilities have undermined the credibility of the system, triggering a rush to withdraw deposits at banks and freezing of U.S. and UK made the interbank market. None taken more money to anyone, challenge even the healthiest banks' operations that are no longer able to manage normal cash flows.
All this was compounded by the crisis of credibility to the financial authorities and U.S. and European policies, given the controversy, the silences and uncoordinated measures taken by governments in the Old Continent. For financial institutions, trust is the main factor. This explains the sharp rise in Libor rates, while government bond yields are falling to historic lows, driven by a huge flow of incoming demand by all. Institutional investors, large and small, as well as investors fleeing from risky assets and seeking safety in the only port left, the securities guaranteed by the state.
Beyond the heightened concerns of an impending recession, the shares have come to represent the financial activity most ill-treated: directly, because the lack of confidence leads to getting rid of bank securities and insurance indirectly, because the stock markets have remained (in addition to government bonds), one of the few functioning markets. With that money now non-existent, for those who need or want to make cash sale of shares is the only viable solution.
source "ilsole24ore"
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