Men of Words

Global Financial Crisis 2008: A Quick Review

For the past one month, we lived in a period of great financial turmoil in recent history. Unfortunately, the torrent of bad news is not expected to end yet.

With the dust from the subprime mortgage crisis still unsettled, not all is known about the severity of the current financial fallout. With banks announcing further (and even further) write offs, and global liquidity on freeze, the end to the crisis is definitely not in sight.

The $700 billion bail out plan by US has done little to salvage the situation, albeit it should be credited for mitigating further panic and uncertainty. Not only until was that a further support by the EU of $2.3 trillion worth of guarantees and emergency aid that the world saw slight relief in the stock market plunge.

However, the worsening economic outlook of major economies and poor performance of major companies did little to abate the storm.

Global stock prices continued their descent resemblance of a free fall. The stock market has seen billions of dollars worth of market capitalization wiped out over the past month.

On the other hand, Iceland has become the first nation to have succumbed to the global financial meltdown due to over borrowing. For more detailed report on Iceland’s situation, see here.

The economic outlook is definitely gloomy. With major economies slated for recession, investors’ confidence have plunged even lower, and is expected to dive even deeper.

Interestingly, it is during this period of panic and fear that could possibly see great transfer of wealth from the poor and middle class to the rich who are able to find opportunities amidst the mess, finding gems others cannot see. Warren Buffet serves as a good role model for this case.

Will we be able to see the end of the tunnel by the end of 2008?

It’s hard to tell. What do you think?