Hi everyone
Earlier it was announced that Congress had rejected the Wall St Bailout. And sharemarkets around the world crashed. The Nasdaq was down just over 9% in a few hours.
What does it all mean for us?
First, money will be very tight so make sure you have access to enough cash to see you through in the next 12 months. Have a few options up your sleeve just in case your banker gets a little nervous and decides to no longer provide you with the funding you need. Talk to other banks and have a store of ready cash handy.
It will get worse before it gets better so don’t even think about riding out the storm. It will be a long wait and you just might drown.
Think twice about any major expenditure right now. Access to cash is going to be critical. The banks will certainly be getting very careful about the loans they make in the coming months.
I agree with many commentators who suggest that the system in Australia is better controlled but it will not save us from the economic fallout. It will probably be less than what the Americans experience but it will be felt.
China is still predicting about 8% growth and that will certainly help our economy. But I wonder about the state of their banking system. It is relatively new and was established in the boom times. Do they have the rigorous regulation in place to ensure the soundness of their banking system? I’ve not read much about that and there is a little warning bell in the back of my mind. Then again, perhaps I’m too cynical.
For now, batten down the hatches, don’t be too adventurous and take your bank manager out to a very nice lunch.
Cheers
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