If you read any kind of financial news, it’s obvious that something big is going on in the world financial markets. The term ‘credit crunch‘ is popping up all over the world, and the actions of both the European Central Bank and the US Fed sure look like attempts to forestall panic selling. It promises to be an interesting trading day, and odds are good that the fun & games will continue into next week.
I’m not an economics expert, so I’m not going to pontificate too much on what’s going on here, other than to say that a number of economics writers have been predicting either a large correction or an outright crash in the financial markets sometime this year due to all of the instability being generated by subprime mortgage securities and the general explosion of liquidity over the last few years due to (to be kind) ‘lax’ lending rules. Every bubble that’s even been created must sooner or later pop… we’ll just see whether this is a minor correction taking place, or the start of something huge.
For more information, here’s a list of sites I like to read that deal with economics. They’re mostly bearish and/or contrarian sites. It’s easy to find bullish or pro-market commentary online, so I won’t list any of those sites.
For what it’s worth, most of my reserves are tied up either in my house (fixed-rate mortgage, thank you very much), or my 401(k) (limited options on what I can do with that cash), so I’m looking at things as a semi-outsider. If things get nasty enough, it could affect my job, but short of that I think I can deal with any issues arising from inflation or deflation short of a hyper-inflationary scenario, which I don’t see as likely anytime soon.
The next week or so promises to be interesting. If there is such a thing as a Plunge Protection Team, we’ll see it in operation in the next week or two. Keep your eyes peeled.