Recession came knocking at the door.

Based on my last post, so the USD$700 billion injection bill was passed after observing a near total collapse of the global financial system, but there was a catch there; the remedy did not HALT THE MOMENTUM of the crisis! Great so the "man made disaster" was so terrible that stocks and indices across the globe felt to their knees at the lowest benchmark they could be in over a decade or so. Eight (8) national central banks made a coordinated rate cut (50bps = 0.5%) that was spurred by the Reserve Bank of Australia (RBA). An unprecedented move I would say in this context. However the market did not felt comfortable with the move and it went on a free fall continuously. Spurring the first Japanese insurance company to go bust, Yamato Life Insurance Co. This is so serious. As of the time of writing, the market seems to be reacting positively now with Dow Jones scoring up a couple of hundred points (*Figure unsure*), hopefully it will sooner or later subside the invasion of one of the worst financial crisis since The Great Depression of 1929.

I personally classify this invasion into three (3) waves of attack. The first wave was the fallout of the sub-prime mortgage crisis. The greed of banks to stimulate quick revenue had overlooked the potential disastrous risk looming around the corner since early of 2000s. Alan Greenspan, former president of the Federal Reserve like it or not, did contribute to this disaster. His continuous ambitious plan of cutting rates to stimulate growth, and by hedging those risk by derivatives is uplifting the whole disaster into the reality region. George Soros and Warren Buffet had once stated the destructive nature of derivatives to the financial market long before but this was strongly opposed by Greenspan even till today. The cooperation between banks, mortgage institution and rating agency (Standard & Poor's and Moody's) contributed to the overall downfall.

Second wave, hit the financial institutions across the European continent and starting to infest into the Asian markets with the first casualty of the Japanese Yamato Life Insurance Co. At the current moment although central banks and governments had injected billions of USD$ into the money market to reliquidify it after weeks of being frozen up due to the loss of confidence, the scenario remains the same (free fall). Therefore I would have to agree with other commentators that this is not a financial crisis because even though funds are injected, the financial landscape remain motionless to the injection and it can be conclude it is a confidence crisis. Whereby investors, depositors, policyholder, and et cetera are all loosing confidence to the financial system. They've been fooled once and not wanting twice. The continuous distrust would halt the entire economy form correcting itself. That's what the fearful scenario is happening.

The third wave is when it starts to hit the non-financial institution, such as the manufacturing, agriculture, servicing , etc industries. Giant corporation such as GM, GE, Toyota, Honda and etc are already expecting the deep cut in their yearly revenue. Which would ultimately slash the employment rate, creating unrest, social problems and the lists goes on and on.

Malaysia is still pretty much safe as a result of de-coupling from the US's economy, well maybe at the moment but definitely not for long. Singapore, our very own neighbour had fallen to a recession mid of last week. Should we strike the panic button? I really think we should.