Panic Monday

The panic on the financial markets was of monumental proportion and ended up with the the FTSE 100 experiencing its biggest one day fall ever. That is quite some feat given that it is worse than Black Monday back in October 1987 and worse than the the impact made by the September 11 attacks.

Yesterday was all meant to be so different. The passing of a bill in the US on Friday to allow the US Treasury to pump hundreds of billions of dollars into the finance system was expected to rescue the world from the credit crunch and recent financial crisis.

However, the announcement of the failure to do a deal involving the stricken German lender Hypo Real Estate, the alleged announcement of the German government to guarantee 100% all its banks deposits, together with the crisis in Iceland where the government has passed emergency powers and called on its large financial institutions including pension schemes to sell investments abroad and bring the money back to Iceland.

So here we sit unsure whether yesterday was the bottom or if there will be worse to come. Until the panic subsides then people will continue to distrust others and look to sell anything with value before it loses more value. Hopefully, as the number of paniced sellers diminishes a number of experienced long term investors will enter the fray and buy shares at these knockdown values. Unfortunately nobody knows when this will happen, it could be today, tomorrow or next year unless of course we are heading for some sort of financial armageddon!