The Great Debate UK
Don't blame global stock markets for being skittish. It is August, after all, a month that has spelled trouble in the past two years.
Recall that, a year ago, Fannie Mae and Freddie Mac started wobbling at the precipice while AIG, desperate for cash, began paying junk-like yields in the corporate bond market. A month later, all hell broke loose.
In August 2007, a shutdown in short-term lending markets forced global policy makers to rush in with a flood of liquidity to keep the lifeblood of the financial system from clotting.
So it's only natural that, this year, sellers are trigger-happy at the slightest whiff of trouble.
- Laurence Copeland is a professor of finance at Cardiff University Business School. The opinions expressed are his own. -
Is the crisis over yet?
In the last 3 months, the Dow and the FTSE have each risen by about 25 percent, the Standard & Poor’s 500 by a third. House prices appear to be stabilising in the UK. Stress-tested and backed by seemingly unlimited government funding, the banks are lending again (if only to each other), so that 1-month libor is down to only 0.3 percent.