Tuesday, September 16, 2008

Press blamed for adding to Wall Street woes

With headlines like “Nightmare on Wall Street”, “Meltdown Monday” and “Terrible Tuesday”, the press has come under fire for increasing the panic on the financial markets. CNN’s Richard Quest in his flamboyant style brushed such accusations aside. “That’s right, shoot the messenger” he said, “what language should we use”. The fact is, the situation is extremely serious and strong language was needed to describe the story, Quest insisted. In a faux BBC voice, Quest imitates a toned down newscast. “Today on Wall Street shares fell moderately as investors had a mild reaction to what one person called ‘the worst financial crisis of the century’” Quest said. Back to his usual excitable chant, he continued, “It doesn’t wash, you use the language that’s fitting for the moment. When people like Alan Greenspan says it’s a once in a century confluence of perfect storm, what else are you going to use?”

The press could be criticised for some of the lurid headlines and speculation of another 1930s type depression; but the seriousness of the current situation cannot be under-estimated.
The collapse of Lehman Bros is not only being felt in the US but in other financial markets. Stocks were down across the board in Europe and when Asian markets finally opened on Tuesday, after the weekend’s mid-Autumn festival, they too saw a massive slide. The bad news continued on Tuesday with increased concern that AIG, America’s largest insurer, might be the next to go under. The Federal Reserve opted to leave interest rates at 2%, a decision that left some investors unhappy as many believed the government might step in [CNN / BBC].
In figures the picture appears very gloomy. In Europe the FTSE 100 fell by 3.36% while the CAC, in Paris, dropped by 1.96%. The Asian markets dropped sharply with the HK Hang Seng falling by 5.44% the Nikkei 225 dropping 4.95%, the lowest in three years. Even the Middle East was badly hit. The Cairo stock exchange dropped 5.77% and in Dubai the market fell by a little over 2%.

As Richard Roth took his camera team around the NYSE most traders appeared to be selling. Nobody was buying on the floor. “This is monumental; historical” said one trader, “I never thought I’d see both Lehman Bros and Merryll Lynch disappear in one weekend”. But it was AIG that everyone was watching with bated breath. “There maybe other skeletons in the graveyard”, suggested Roth. “There maybe, this ain’t ended yet” the trader said. And no-one knows how big that graveyard is. Uncertainty over the fate of AIG and the speculated collapse of Washington Mutual may indeed be just the beginning. As Richard Quest so elegantly put it, “It’s like someone snagging a woolly jumper on a nail, and it’s all becoming unravelled”. This was the price of globalisation, but “there’s no point in worrying about it” Quest added, “since there’s little you can do but watch” [CNN / BBC]

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