The Global Search for Light at the End of the Tunnel

President Bush’s latest outcry for a coordinated effort to tackling the global financial crisis may have been heard, but all government efforts continue to appear to be in vain. Global stock markets had no respite from the recent downturn, continuing their slide to all time-lows; UK’s FTSE 100 fell 21.1% during the week, the Dow Jones fell 18%, and the German DAX plunged by 21.6%. The prospects of eschewing a global economic recession are grim, and unsurprisingly the hiatus of financial markets has begun to filter through to the real economy. For example, Eurozone leader Germany has seen a year-on-year fall in exports of 2.5%. Furthermore, the global slump has accounted for a 13% drop in exports to 75.7 billion euros in August from 87 billion euros in July. Evidently, as one of the world’s biggest exporters, the credit crunch has cost Germany dearly. Iceland’s outgrown and troubled banking sector also took another massive hit with the nationalization of the country’s largest bank Kaupthing. Despite concerted efforts of governments to revive money markets, the cut in interest rates by 0.5 percentage points within the Eurozone and the U.S. has not halted the massive stock sell-off amid continuing fears of a global recession. With rescue packages exhibiting little sign of a deep-rooted impact and continued symptoms similar to those prevalent prior to the Great Depression, can we actually still apply the foundations of free-market theory to current economic discrepancy?

The euphoria surrounding complex financial instruments was exaggerated by inevitable corporate greed. As human nature is inherently evil, excessive deregulation of economies has undermined the virtues of long-term growth and development. Now we are seeing middle-income families close to retirement lose their life savings invested in corporate pension funds through company bankruptcy while those same company executives are walking out with multi-million dollar remunerations. While governments are endeavoring to maneuver the crisis back to safe haven, their failure to recognize that they were, in fact, the main instigators will of course leave the general public in fury and bewilderment. Admittedly, the expansion of money markets has brought about several opportunities, but these have been outweighed by flawed intricacies. The aggravation and anxiety is reflected through the global sell-off, and in times of crisis people search for light at the end of the tunnel. With sales of the Vienna Philharmonic gold coins increasing by 230% since last year, the recent “Gold Rush” indicates that the search for security may be coming to an end.