In Pursuit of Agave Palmeri

The Credit Crunch

For the last weeks, even the most uninformed has been confronted with the state of the world's finance. The collapse of respected financial institution seemed to have triggered enough fear all around, to convince money world that things will never be the same.

But the big game is on in the USA, where President Bush has managed to railroad Congress into passing a four billion dollar package which he claims is needed to save the local economy, and to restore confidence in the international money market. It started off as a $700 billion package, but after much debate and hostility by politicians across the board, the final amount had to be reduced and sweetened, to make it much more acceptable to the political spectrum.

So far, the passing of the bill by both Houses in the United States, has done very little to calm the money market. The European Community leaders recently met to decide their course of action. Most expected more grand plans to support banks and other financial institutions, and at the expense of the taxpayer. But this did not take place, leaving individual countries room to manoeuvre, and reflect and act on national concerns.

But will this approach work? Will these so-called good deeds restore confidence into financial institutions which, suddenly, seem to be unable to stand on their own two feet? Nobody knows for certain. This is new turf for all. And the following weeks will demonstrate how effective these desperate measures will affect the international money market.

If the last few days is a guide, there is little confidence in the market whatever measures are presented. And numerous attempts to coordinate action across the world has made very little difference. Meanwhile, banks and other investment institutions continue to go under, and have to be propped up wherever by the tax payers. For how long will this uncertainty continue; no one is certain. But what it is certain if and when calm returns to the market, things would never be the same.