Weekly international investment round up to 30 September 2008
While millions have been focusing upon the failed $700 billion rescue plan which was intended to end the paralysis of the financial markets by pooling contaminated debt away from the blundering banks, over a billion other people have been gazing skywards.
The contrast in confidence between the existing global economic champion and its up-and-coming rival offers investors true hope amid all the current angst and despair.
For example, while space mission commander Zhai Zhigang was orbiting the earth waiving his Chinese flag, American politicians were locked in deep debate about how to dig themselves out of the biggest financial mess in living memory and as the Chinese astronauts were returning home to a heroes welcome and mass celebrations following their space mission which saw China successfully complete their first ever space walk becoming only the third nation to do so, disgruntled Americans were taking to the streets in protest against Wall Street’s fat cats whom they blame for putting their homes and jobs at risk.
Although the markets had a clear idea that the rescue plan could fail as demonstrated by the brokers red screens leading up to Monday’s vote there was still hope that the proposal which had originally started with three pages but had ballooned to over 110 pages throughout the many days of political debate in the American Congress, would be passed. It was only when the Speaker of the House’s gavel struck the desk ending the bill that the ‘no’ vote was confirmed and that the gravity of the situation hit home, sending the markets spiralling further downwards.
In contrast China’s space mission was a statement of their intent. With a growing economy, the world’s largest reserves of foreign capital and hosts of a successful Olympic Games behind them the message their expensive space mission sent out to the world was ‘look at us!’
America is also coming back down to earth. The rejected rescue package was widely seen as a bailout for Wall Street rather than one that could save the nation and while frantic work is still going on behind the scenes to construct something which is palatable it is feared that whatever watered down package is now put together can it really bring back the much needed confidence in their financial system? The same politicians who did little to safeguard the interests of the American people are now the ones being relied upon to sort out the mess, all at a time when elections are around the corner.
Just as it is often said that ‘the ugly camel is a horse designed by committee’, whatever shape any new ‘improved’ rescue package may take could be so ineffectual that it is doomed to failure.
America is a great nation populated by talented and resource full people, so statements suggesting this could be their end are somewhat premature but just as demonstrated by the Chinese astronauts who for a time held the world in the palm of their hands, China’s light is getting brighter while unfortunately the US is currently living on the dark side of the moon.
Mark Lamb is Director of FPC Investment Consultants who are Independent Financial Advisers and regulated by the MFSA to provide investment services under the investment services act 1994. For further details please contact Mark Lamb, by email on [email protected] by phone on 21318008 or through FPC’s website www.fpcmalta.com
This article does not intend to give investment advice and its contents should not be construed as such. Information in this article has been obtained from various public sources and is given by way of information only. Readers are always encouraged to seek independent financial advice before making any investment decision.
