Investors sit tight until stability returns
The latest developments with Lehman brothers, AIG, Fannie Mae, and Freddie Mac are absolutely mind blowing in terms of their significance and magnitude and should convince any doubters about just how calamitous the sub-prime crisis is. Things are happening in markets today that nobody would have believed possible 18 months ago, particularly the manner in which the free market US administration is now bailing out some financial institutions on a daily basis.
The capitalist system has created a huge crisis that threatens the stability of the whole global financial and economic system. It does suggest that unfettered free markets do not always deliver the best outcomes and that the regulators cannot be trusted to regulate anything in an even-handed and prudent manner. How US banks were allowed engage is such irresponsible lending behaviour and how the rating agencies facilitated the packaging of useless mortgages into investment products is hard to figure out.
