Capitalist World teaching lessons in Communism..

The last few weeks have been really disastrous for the financial markets world over. The dust has still not cleared and the primary reason is that when everybody thinks that the worst is over suddenly the worse happens. Every other week a new institution is adding to the stockpile of the debris. Much like the bomb blasts in India these days. When you think that this was the last as police has solved the case, it shocks you again. In Delhi even the debris of the last blast was not cleared properly when terror struck the city again.

Well, coming back to the financial markets, first Bear Sterns failed. Everybody knew that something is seriously wrong with the system but companies were employing good methods to hide the storm inside their account books. The stock market world over reacted to the news driving the wealth of the equity holders down by many percentage points. Very people were able to understand that why when Bear Sterns fails in US, the stock of Reliance Enery goes down in India? Anyways, I can't understand that even now but one thing that I can see is the capitalist world is perhaps teaching some lessons in communism to the world. The supporters of free market are trying to find excuses to cover their theory and the governments who funded fight against communism for more than 4 decades are wisening up to the thought that somewhere something went wrong.  

Bear Sterns was bailed out and has to go for a fire sale price of around 10% of its original value. Lehman Brothers, Fannie and Freddy, Merrill Lynch, AIG, Washington Mutual, Northern Rock etc etc. They all fell prey to one single crisis and except Lehman all others have to enter into an agreement with the government. Just today the news came about Bradford and Wingley and of Wachovia bank. Bradford will most probably be resuced while Wachovia for the time being is on its own to find a buyer who could assume its debt. These were some of the institutions which have spearheaded the financial sector reforms and their failure actually casts a spell of doubt on the efficiency of those reforms. 

Well, the unified message coming out of this crisis is that one country single handedly brought the world's economy on its knees. Some of the American financial institutions are breathing their last and news have started coming from British institution. Bradford and Wengley is the current victim and hopefully within a couple of week many more companies are going to announce the quantum of losses. Over reliance on USA have pulled many economies into this crisis and it's just a matter of time when the government across the world have to go shopping for companies. 

Someone must be smiling even during this bloodbath. I wonder if it's Karl Marx up there.