It’s What the Papers Say
Friday, September 26th, 2008 by Rob Brown
‘Stand by for Black Monday’ screamed the front page of tonight’s London Evening Standard. Then it hit me. My mental image of the Wall Street Crash of 1929 is a newspaper front page.
The market has been in need of a correction, of that there is no doubt. Long term demand for oil is also a significant underlying factor. But, the maelstrom in which we are enveloped is a massive over correction and one fuelled by fear and drained confidence. We need to think about how the plug was pulled. The ‘Credit Crunch’ is a newspaper headline; squeezing a profusion of complex economic causes and effects into a two word bawling banner.
More than likely by the time you read this we will know if the markets have ignored the doom prophets or if we are in free-fall once again and the US Senate sees that the Paulson plan is the best worst option. And what of this plan? The media have called it a ‘$700 billion bail out’, more headlines, but it is really an attempt to put confidence back into the markets and underwrite the ‘toxic debt’, oh there goes another one. This isn’t putting taxpayers cash into bank bonuses it is a plan for putting the confidence back into the system from someone that understands the financial markets as well as anyone can. If it works it won’t cost the US taxpayer a dime, some commentators have even suggested the treasury could profit from the swap.
If we have hit the bottom, and let’s hope we have, it is time we put aside the big font fear forecasts in favour of cautious and considered copy.
