January 15th, 2009 
Vijaianand Late 2007, a virus broke out from nowhere. Everybody knows where it came from but nobody expected its sudden appearance. It wasn’t really a big scare until its effects started creep in different areas of economy to take the real tool. That virus was Subprime Mortgage virus as I like to call. It slowly turned as a credit crunch epidemic affecting the US economy first, bringing it down the wall street from its shining gloom days. DOW fall from 14,000 points to almost close to 7000 points in just a year’s time
(Image courtesy from lifeandinsurancenews.com)
Epidemic spreaded all over the world now. The first half of 2008, big banks like WAMU, Indymac, Wachovia, decades old financial institution like Bear Sterns, Lehmann Brothers all fall as victims followed by Insurance companies, Manufacturing industries, auto industry and many more struggling to make their living in US. Mergers, take overs, job loss and lay offs are effects of this epidemic. It is
US government has struggled and still struggling in many ways by offering bail out money to help affect people and banks, cutting interest rates, loans to banks and much more. But they couldn’t able to stop the effects till now.
Later half 2008, we started hearing news from Europe with their banks falling short of their business then now its Asia.Economic condition of many developing countries are now in a downhill state. The damage is so severe it is going to take years for the countries to get back in shape.
Stock market fall and down economy is a cyclic effect like many financial analyst call but the way it fell this time totally different and bad compared to previous depression and falls. But the Subprime virus in a way did some good like the real virus which always brings out good medicine and inventions.
This subprime mess and credit crunch tested the limits of many companies bringing some of their wrong doing’s and giving them punishment by eliminating them as their weak to withstand. By doing so, it is slowly creating a safest environment filtering, survival of the fittest.
On the other side, it is also working for the good to show the culprits by bringing them to the surface, some example including Bernie Madoff Ponzi scheme and the recent episode of India Satyam Companies Accounting fraud. Satyam company was the 4th largest IT company in India having ties to many international companies as their outsourcing hub last his share value in just 2 days and black listed from all the markets. It is the first ever biggest scam in India’s corporate history. It is named as Indian’s Enron and its CEO who brought this mess is now called as India’s Madoff.
I didn’t share anything new except expressing them in a way we all can understand. As per many, this credit crunch epidemic is not over yet. Europe and Asia are just starting to see the effects of this virus. So we are yet to see some worse conditions until it starts to show some positive signs as many analysts concur.
Today’s stock market financial sectors fall is yet another indication for more bad days ahead for finance institutions. Watch out and play safe in your investments as the field is really getting bad out there. As I told in my previous blog, Think Positive. There are always opportunities open up during these tough crisis times. Warren Buffet made money by buying during these kinda of tough times. So look out and make use of it. Opportunities can only knock your door, it you who want to check and grab if it’s suitable for you.
Try to continue on your financial goals like Emergency funds, Kids savings or Retirement Planning and Investing. Financials Stocks are way down but are they good to buy. I am buy good ones by dollar cost average using Sharebuilder.com. You can also do your analysis and choose the right stocks. In few years(5 or 7), you are sure to reap the rewards.
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