CRISIS!!!

I believe that the unfolding of the current events can be attributed, to a large extent, to the precipitous measures taken by governments to support faltering financial institutions and try to boost confidence in the stock market and ultimately prop the stock prices. They were, of course, looking at the 1929 events, when a series of uninspired governmental decisions did nothing but bad to the developing crisis. Well, 2008 is not 1929. The level of integration and coordination of economies worldwide is incomparably higher today and the cooperation of governments is at a different level now than back then. The smartest way to deal with the crisis today would have been to let the stock prices fall in an unprecedented manner, because in my opinion, prices would have bounced back once they have reached the psychological bottom. This, coupled with a slight alteration of the central banks’ interest rates would have certainly led to a quick recovery. What is happening today is that investors are still searching for the real bottom, after a series of false rallies each triggered by the various measures taken by governments. This has lead to an escalating uncertainty and people, rightly so, are looking for safe heavens, waiting for the crisis to consume itself. This waiting, of course, is translated in the real economy through suspended investments, postponed expenditure and decrease in consumption.
In any case, contrary to many pundits’ beliefs, I do think that, however deep, recession will be short in time and the recovery will be rather quick, bringing the world development to unprecedented levels. This would be so because today we have a much higher number of informed and eager consumers, all over the world, with increased purchasing power and with a willingness to increase their life standard. The only real risks ahead are an uneven spread of wealth, exhaustion of natural resources, depreciation of natural environment and climate change.