Tag Archive - fear

Fear Spreads to Asian Markets As Free Market Economics Falter

18 September 2008 by , No Comments

I received an email from a friend in Hong Kong this morning:

Asia is watching in shock and wondering why if the problems are in the US, are the markets here selling off more dramatically.

It is back to fear tactics which immediately offset the fight or flight syndrome. In this case it is definitely all about flight. Asia in particular appears to be more volatile than other markets. It is based on sentiment according to Dan Parr, the Asia-Pacific head for BrandRapport, a consulting firm. Morgan Stanley might have released very positive third quarter earnings but nobody wants to believe that this is any indicator of their health. It is like withdrawing your bet from the fastest runner in the race because everybody else tells you that he’s surviving on steroids. Morgan and Goldman stock has come under such selling assault that their share price has gone down drastically. Investors are instead snapping up three-month Treasury bills with virtually no yield pushing gold to its biggest one-day gain in nearly 10 years. The only truly happy person must be the Indian housewife who has become rich overnight by virtue of her stridhan (gold jewelery inherited by an Indian woman at the time of her wedding).

My friend continues her email:

Also America’s credibility as bastion of free markets has fallen hard.

Indeed the Fed’s bail out of AIG, Fannie and Freddie are perceived by many as a free market detour. A free market economy refers to a system where the buyers and sellers are solely responsible for the choices they make. Free market gives the absolute power to prices to determine the allocation and distribution of goods and services. However, the notion of free market is mainly a theoretical concept as every country, even capitalist ones, places some restrictions on the ownership and exchange of commodities.

Whether the bailouts were a good idea or not remains to be seen. Some remained concerned about the depletion of the Fed’s resources, others remain incensed about the use of tax dollars. However one has to consider the the ripple effects of the failure of a Fannie, Freddie or AIG on the US and then global markets. Shockwaves in Asia are case in point. Personally, I am still annoyed that the Fed would not put up a paltry $4 billion to bail out Lehman Brothers. Had it done so, Morgan Stanley and Goldman Sachs might be having a better day. Not to mention the 15,000 Lehman employees who did not get bought by Barclays.

The Mother of All Mondays: An Insider’s Approach to Tackling the Lehman Brothers Crisis

15 September 2008 by , 3 Comments

The blogsphere has labeled today the mother of all Mondays. As I roll out of bed this morning still in a twilight zone from severe lack of sleep over the last 72 hours, a hopeful voice from somewhere inside of me still cries out maybe it was all just a terrible dream. Indeed. Maybe today will be like any other Monday where I can go to work with my morning french roast having dropped the kids off at school.

Alas, I am jerked into reality within moments by the sound of the phone. My husband is a Lehman Brothers employee…..while a Lehman Brothers still exists, that is. The weekend has been fraught with phone calls and emails from his fellow employees following the crisis step by step and speculating on their future at a company which just recently was known to be the fourth largest investment bank on Wall Street. ‘Condolence’ calls from friends and relatives expressing their concern, sympathy and support have left us amazed at the amount of people who are thinking about us.

The press having had a field day with the development of events over the weekend, now talks about their trickle down effect on the economy. On most days I cast my emotional net wide, but today as a Lehman wife, all I can think about is its trickle down effect on my family and on the 24,000 other families that depend on Lehman for their bread and butter. As somebody pointed out on a blog, Bank of America rejecting Lehman in favor of Merrill Lynch feels very much like a groom leaving his bride at the altar in order to run off with her cousin. An eery feeling of uneasiness hangs over our home like a portentous black cloud; the last time we felt like this was during 9/11.

Almost exactly six months ago when Bear Sterns was taken over by J.P.Morgan, my husband tells me that the word on Wall Street is will Lehman be next? And even though Lehman has a solid investment banking business and good liquidity, the truth of the matter is that like any emotionally charged individual, Wall Street is driven by fear and will consistently operate based upon fear tactics. Why does fear propel us into reacting rather than acting? It is the stalwart characteristic of the unstable mind leading to an unstable society.

Why do things like this happen to us, asks my ten year old who is just coming to grips with the fact that life is as much about having bad days as good days. I turn around from the kitchen sink and begin to explain to her that working in the financial markets has far reaching effects on other people, other companies and the economy at large. So if bad decisions are made by someone , somewhere they often impact those who made good decisions; it is a basic law of economics. You’re wasting water, mama, she says eyeing the running tap, don’t you think we should be even more careful about things like this now that Papa is out of a job? I smile and thank heavens that the green values education has paid off!

It is during moments like this that I truly understand what it means to be hybrid: to be someone whose emotional and physical energies are integrated into the psyche and well being of her kids, her partner and her own individual self. My husband will maintain calm because he does not want to upset me, but this is a time when I look to invest even more heavily in the emotional well being of my partner and kids so that we can ease the shock of this mother of all Mondays, and pull together as a family to build Tuesday into hopefully a better and more meaningful day.

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