The Market's turn for the worse is not a panic.
This isn't a mental thing. This isn't a perception thing. If we just stay cool, calm, and collected the Market's problems aren't going away.
This is all happening because our economy is shit. This is all happening because huge financial players and institutions invented over the past 20 years (with cheap loans and through borrowing everything, CREDIT) value and wealth out of nothing. Now the cat is out of the bag and the nothing is turning out to be......wait for it.............nothing! This is ENRON economics, it is all very well documented. They even study it in universities now!
This is a Reckoning, not a panic. Although, people are indeed scared.
Here are some great posts by a few fellow bloggers of mine that when taken together are really important to understand. They are paraphrased below.
Madrino - Let's see if we can name some of these "nothing" Enron-like financial games: derivatives, swaps, futures, options, mortgage-backed securities (MBSs), collateralized debt obligations (CDOs), and structured investment vehicles (SIVs). There has been a massive migration of capital from real, productive industry to the "speculative sector" run by financial giants like AIG and Lehman Brothers.
Greatdogs - One thing to remember is that a year ago these were the same institutions who were absolutely giddy over the market. 14,000 was their cry. Nevermind the fundamentals, 14,000! Ignore the fact that this is all based on debt and sooner or later somebody's got to pick up the tab. Now were these players just this oblivious to reality? To think that they were is asinine.
Savantster - The "Government" and the "Free Market" are tied together. Government is the entity that hosts the Market, they run the dang thing. In this case, they deregulated the markets instead of ensuring the "fundamentals of the economy" were functional. The Government is the only thing with authority to set the rules, and the rules they made favored fast cash for the crooks and collapse of the entire engine. They just didn't think it would go this far this fast, that's all.
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What is certain is that all of this will shape the future of Global Banking. What is certain is that certain influential factions want it shaped to their image, and are now seizing this opportunity to do so. I for one hope that the people who work and pay taxes (not the people who have money/get to invent and print it out of thin air, and whose daily existence consists of moving it around) get to shape this new financial foundation. But I am not holding my breath, for Global Banking, without a fundamental change, will still be run by the "banksters".