September 20

Credit crunch fallout

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This week, the world as we know it changed forever. Well, at least for the foreseeable future. The inevitable fallout from the credit crunch happened. Shockingly, it was all concentrated into one brutal week. The bastions of unshakable establishment on Wall Street and in the City of London crumbled. Lehman, Merrill Lynch, AIG, HBOS. Bank failures, rescue takeovers, government bailouts all came thick and fast. Massive, intense, relentless.

And the markets roared into life yesterday and bounced – a hugely energetic bouncy bounce that reverberated around the world. Shanghai gained 9.5 per cent, Hong Kong’s Hang Seng 9.6 per cent, the FTSE 100 had its biggest daily gain in its 24-year history with 8.8 per cent and the S&P 500 closed up 4.0 per cent, having risen 4.3 per cent on Thursday. And the surges in London and the US were partially fueled by a ban on short-selling announced on Thursday night.

With friends and clients describing their week as hellacious, many feel they have literally been to hell and back. Most feel that there is more to come. No one seems terribly sure about anything. The markets may be closed for the weekend, but the floors and desks and corridors are occupied as exposures are calculated and able minds grapple to find a way forward in unchartered terrain.


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