Apprehension and foreboding seem to have taken hold on Wall Street this week, as the stock market again plunged and investors became convinced that the nation is on the verge of a deep and prolonged recession. Ironically, the plummeting stock market in the US could not be blamed on any particular single piece of distressing news. There have been no additional bank failures or government bailouts or corporate bankruptcies. “I have never seen a panic like this”, David Wyss, chief economist at Standard & Poor’s, told the Washington Post. “I have seen stock market drops, but, not an overall panic”. Fear from Wall Street spread into Asia on Friday, where markets were dramatically lower in early trading all the way from Japan to Australia. “It’s a domino effect. Stocks are falling out of bed. There is distrust in the market and distrust in the government that is trying to heal this”, said Peter Cardillo, chief market economist with a New York-based business consulting company.
Continuing its efforts to stanch the damage, the Bush administration this week said it was working on a plan to inject government cash into some of the nation’s troubled banks. Meanwhile, global economic policymakers are gathering in Washington on Friday for the International Monetary Fund and World Bank annual meetings, and will seek coordinated responses. But, one nearly universal reaction so far has been to point an accusing finger at the United States for having caused all this financial turmoil. although there have been no recent failures of banking institutions of late, the worst financial crisis since the Great Depression, according to the Washington Post, “is claiming another casualty, American-style capitalism. Since the 1930s, US banks were the flagships of American economic might, and emulation by other nations of the fiercely free-market financial system in the United States was expected and encouraged. But, the market turmoil that is draining the nation’s wealth and has upended Wall Street now threatens to put the banks at the heart of the US financial system at least partly in the hands of the government”.
How the United States and the rest of the world are going to weather out this crisis remains to be seen. But, one thing is certain, said Prime Minister Vladimir Putin, conferring with the Communist members of the RF Gosduma. “Confidence in the United States as the leader of the free world and its economy is undermined and there’s no turning back”, he pointed out grimly, as his Communist audience nodded in agreement.
10 October 2008
Yuri Reshetnikov
Voice of Russia World Service
http://www.ruvr.ru/main.php?lng=eng&q=33597&cid=87&p=10.10.2008 (in English)
