New YORK - Stocks slumped Wednesday morning, with the Dow industrials tumbling more than 300 points, as the government's emergency rescue of AIG exacerbated fears about the stability of financial markets. The sell-off comes in the wake of Lehman Brothers' bankruptcy and Merrill Lynch's sale to Bank of America.
Investors also focused on a report that showed construction of new homes fell to the lowest level in 17 years.
- CNNMoney.com
---
The world as we knew it has now come to an end.
It began with a housing boom in the United States close to a decade ago. Loans were granted by insurance companies to entice real estate buyers to purchase new homes without thoroughly making a background check in their ability to pay. Then the war against terror exploded and the US Government shifted its attention from running the economy efficiently to waging war in Iraq and Afghanistan. The wars were never successful from the very start and billions of dollars were spent just to oil the massive American war machine just to hunt down individual Al Qaeda members to their caves and mountain hideaways. Meanwhile, big and small companies began off-shoring their back-office operations in countries like India, China and the Philippines leaving more Americans jobless. These companies claim that such move is good for business but the truth is,
the more people in America loses their jobs, the higher the chances the economy plunges into a recession.
And it finally did this week after several high-profile investment banks filed bankruptcy protection after they failed to raise enough capital to cover up for their continuing loses.
News footage of white-collar workers walking out of their corporate headquarters in New York carrying huge boxes of office mementos were aired on CNN last Tuesday morning. Lehman Brothers, a global financial giant had just filed bankruptcy protection after acquiring debt of over 600 billion dollars. Losing one of the pillars of the global banking industry lead to a domino effect. By Wednesday morning, AIG Insurance was in a desperate move to raise its capital or it would also file bankruptcy protection by the end of the day. Realizing the consequences of AIG succumbing from its debts, the US Government stepped in to bail out the ailing giant.
The bailout was a source of relief for every banker and stock trader across the planet. It spurred trading in floors leaving some major stock markets closing on a rebound after a series of reds since last week. Not everyone was satisfied with the bailout package though. It was reported in CNN before I left for work this afternoon that a long queue in AIG Singapore had formed after hundreds of its clients decided to cancel their insurance policy with the company in fears of another threat of bankruptcy maybe at hand.
The Wall Street Crisis is far from over. Fueled by negative speculation and the ongoing recession in the United States economy, things will only start improving after the next US president has been elected. The ripples it produced is being felt even in the shores of the country. With almost a quarter of the population tied to market changes in the US, there is a possibility that many outsourcing people may lose their jobs before the year ends.
Such is the price for having a Globalized Economy. It is also the reason why I'm watching closely the market collapse happening in the other side of the globe.
With oil prices heavily dependent on world market conditions and with China preoccupied in its witch hunt for those responsible for adding Melamine poison in infant milk formula; with Russia continually harassing Georgia, Ukraine and the Baltic States in its quest to become a regional power and with the Republicans still bent on exterminating the world of terrorists - like Osama Bin Laden, Mahmoud Ahmadinejad and Vladimir Putin,
I wonder if this is just another phase in the entire human epoch...
... or the world has finally lost its senses?
Investors also focused on a report that showed construction of new homes fell to the lowest level in 17 years.
- CNNMoney.com
---
The world as we knew it has now come to an end.
It began with a housing boom in the United States close to a decade ago. Loans were granted by insurance companies to entice real estate buyers to purchase new homes without thoroughly making a background check in their ability to pay. Then the war against terror exploded and the US Government shifted its attention from running the economy efficiently to waging war in Iraq and Afghanistan. The wars were never successful from the very start and billions of dollars were spent just to oil the massive American war machine just to hunt down individual Al Qaeda members to their caves and mountain hideaways. Meanwhile, big and small companies began off-shoring their back-office operations in countries like India, China and the Philippines leaving more Americans jobless. These companies claim that such move is good for business but the truth is,
the more people in America loses their jobs, the higher the chances the economy plunges into a recession.And it finally did this week after several high-profile investment banks filed bankruptcy protection after they failed to raise enough capital to cover up for their continuing loses.
News footage of white-collar workers walking out of their corporate headquarters in New York carrying huge boxes of office mementos were aired on CNN last Tuesday morning. Lehman Brothers, a global financial giant had just filed bankruptcy protection after acquiring debt of over 600 billion dollars. Losing one of the pillars of the global banking industry lead to a domino effect. By Wednesday morning, AIG Insurance was in a desperate move to raise its capital or it would also file bankruptcy protection by the end of the day. Realizing the consequences of AIG succumbing from its debts, the US Government stepped in to bail out the ailing giant.
The bailout was a source of relief for every banker and stock trader across the planet. It spurred trading in floors leaving some major stock markets closing on a rebound after a series of reds since last week. Not everyone was satisfied with the bailout package though. It was reported in CNN before I left for work this afternoon that a long queue in AIG Singapore had formed after hundreds of its clients decided to cancel their insurance policy with the company in fears of another threat of bankruptcy maybe at hand.
The Wall Street Crisis is far from over. Fueled by negative speculation and the ongoing recession in the United States economy, things will only start improving after the next US president has been elected. The ripples it produced is being felt even in the shores of the country. With almost a quarter of the population tied to market changes in the US, there is a possibility that many outsourcing people may lose their jobs before the year ends.
Such is the price for having a Globalized Economy. It is also the reason why I'm watching closely the market collapse happening in the other side of the globe.
With oil prices heavily dependent on world market conditions and with China preoccupied in its witch hunt for those responsible for adding Melamine poison in infant milk formula; with Russia continually harassing Georgia, Ukraine and the Baltic States in its quest to become a regional power and with the Republicans still bent on exterminating the world of terrorists - like Osama Bin Laden, Mahmoud Ahmadinejad and Vladimir Putin,
I wonder if this is just another phase in the entire human epoch...
... or the world has finally lost its senses?
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