THE CREDIT CRISIS AND MARKET TURMOIL
Lehman Brothers files for bankruptcy and Merrill Lynch gets taken over.
Morgan Stanley and Wachovia Corp. are in merger talks.
I asked our US correspondent Daniel Ryntjes how these latest developments are reshaping Wall Street?
He says: ” We come from a place wherein these names were giants of Wall Street. Now we see the biggest investment banks such as UBS and Morgan Stanley forming a global consortium of banks, with a liquidity pool of 70 billion US dollars to lend to troubled financial companies. We’ll see a Wall Street dominated by risk managers but not the high flyers. We’ll see a Wall Street operating on safe mode.”
Meantime, as I was making calls to market players ( which is a regular part of my mornings), I spoke with the head of treasury research in one of the regional banks about the contagion effect on Asia . He says the impact will be seen in credit risk and deleveraging. He also sees volatile trade in the coming weeks.
I also called the chief investment officer of a European private bank as to the best investment strategy in this troubled trading environment. Put simply, he said, ” Don’t play the hero. Hold on to cash”.
But a chat with an economist from a regional research firm, really struck me. He said he and others like him now have to carefully think before they speak because investors are so jittery — it’s so easy to push the panic button in these uncertain times. It’s quite scary.
Do the recent developments in the financial world affect you? Who do you think is to blame? How are you restructuring your investment portfolio? Are the sharp market drops making you shudder? Do let me know your thoughts.
