Monday, October 6, 2008
'World wreckage,' or not?
Earlier today, Marketwatch.com splashed the phrase "World Wreckage" in the headline on the the plunge in stock prices. That was when the DJIA was down 700 points and heading further south. But when the bell rang at 4 o'clock, the wreckage was about 370 points. Markets are indeed falling -- but is it "free fall," to use another Marketwatch phrase from the trading day?
These are, as we are constantly reminded, terrible times, and the financial contagion is spreading from Wall Street globally. But scores of countries continue to produce products and services that people want -- I'm not talking about ocean cruises or $150 bottles of perfume. Can that supply and demand be brought to a halt because this investment company or that bank has too much debt (real or not) in relation to its assets?
Fear is a powerful force when owned money is involved. But it is not a force stronger than the engines of production in China or India or Brazil, much less than those in industrialized countries.
The factory workers in Guangzhou, and the worldwide consumers of their products, probably won't be heard as panic selling captures the markets, but the force of those and billions of other transactions will prevail sooner or later -- and I think it will be sooner.