Global Financial Market Outlook for 2008


The past five days the world has witnessed the worst and deepest financial crisis in the last fifty years and it is not over yet; some predict that the worst has yet to come. Although central banks across the globe have acted in order to put an end to such turmoil, so far every financial measure has proven to be short lived.

It is like giving an aspirin to a seriously ill patient; it is pointless to cure the symptoms, we need to know what lies at the bottom of it, we must know the nature of the illness. Some of the symptoms count gold futures hitting more than $1,000 an ounce, the first time in history. Oil hits $100 a barrel, again the first time in history, Carlyle Capital near collapse, as well as Bearn Sterns, the US dollar hitting record slumps in Asia and Europe, the stock markets almost nose-diving everywhere.

For a while some, if not many, financial gurus reassured us that it was nothing more than the usual financial turmoil, the stock markets needed to readjust after their continuing growth. Reality has proven more dramatic, the crash economy’ is the result of two mayor events: first the housing collapse crisis, then the unstoppable rise of the oil price have.

These two factors have seriously slowed down the world economies to such a stage that even the most reluctant economist now dares to talk about recession.
World governments have been forced to readjust their economic forecasts, including China and India. In the meantime inflation is rising too, so what we could and should do? It has been said that this crisis indisputedly marks the total failure of the figure of the economists for they have been unable and incapable to forecast and realize the real and dramatic depth of the current crisis.

So far there has not been a globally joint action between the world’s governments to handle it, but only occasional interventions from the central banks.
But it takes a lot more than that, we need a global action, a global plan worked out by the governments of the most important economies including the emerging ones. Such plan can be only worked out by the governments and not by financial institutions, such action must be political not economical.

It has been said that economists and politicians have too easily forgotten the lessons history has taught us, so in this perspective why not revive the spirit of Bretton Woods? Why not work out a medium global plan rewriting the rules, writing strict new ones in order to regain the confidence not only of the investors but also of the common citizens? Moreover these tough times can be an extraordinary opportunity for the world community to reset the terms and the ethics of economy in terms not only of credibility but also changing the attitude of the financial institutions toward the investors, especially the small ones.
We need a different and perhaps a more spiritual philosophy, something we have lost memory of.