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Are we on the road to perdition?

Zafar Anjum | Sept. 19, 2008
If you ask me in terms of imagery, this financial crisis is akin to the 9/11.

Gosh, yet another post on the meltdown on the Wall Street, as if we hadnt had enough of news stories, commentaries, op-eds, analyses, talk shows, the whole shebangthe result of the media going berserk on a story like this!

I know you might say that, but believe me, I will be short on detail and long on conclusions in this post. And we will also try to see what it all means for the IT sector.

No matter how much you talk on this topic which is on everyones mind these days, it deserves this kind of attention. Why? The former Fed chief Alan Greenspan labeled the current financial crisis as once-in-a-century crisis. Many commentators have said that it is the worst crisis since the depression of the 1930s. According to Dwight M. Jaffee of the Haas School of Business at the University of California, Berkeley, this view is right as the dollar amount of the losses suffered on financial instruments this time is the greatest since the 1930s (corrected for inflation). An FT journo said that it was the worst financial crisis he had seen in his journalistic career spanning 40 years.

If you ask me in terms of imagery, this financial crisis is akin to the 9/11. That was not just an act of terror. As author Naomi Klein has noted in her seminal book, No Logo, the attacks on the World Trade Centre and Pentagon were acts of real and horrifying terror, but they were also acts of symbolic warfare, and instantly understood as such…the towers were not just tall buildings, they were symbols of American capitalism.

9/11 was an act of terror. It was an explosion attacking the nerve centre of American finance.

9/14, when the current crisis publicly started, spread horror in the hearts of the American and international money marketsit was an act of implosion, if you will. The American financial system caved in, under the weight of its own greed. I bring up the word greed as as Tom Friedman noted in his Tuesdays column: Wall Street the financial industry became a bubble in recent years thanks to an excess of liquidity and the oldest bubble maker in history: greed. (Italics: mine).

So, clearly, no matter what you say about it, it is a gargantuan problem. That is established. Fannie and Freddie, Lehman Brothers, AIG, Merrill Lynchthere was blood on Wall Street for a week. The global financial markets were impacted but correction has begun to kick in after the Feds bailout of AIG. Yesterday the Asian bourses bounced back. And today, as I scan the papers, I see that the Dow has swung back, closing up about 400 points. So, if the Fed has come in and mopped the blood away with buckets of dollars, and the credit markets are feeling a little better, why are we still talking about it?


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