The house that Jack built...

If there's any news these days, it's that of market crashes, fears of recession, failing bailouts, excessive government intervention in the money markets, and similar stuff which is becoming the talk of every disgruntled town.

Never has Wallstreet been given such a bad name as before this, for triggering off such a widespread financial disaster. The 19.1% fall in Russian markets is an indication that was not a mere flu which had gripped the US economy but a cancer spreading to every limb of the global economic ecosystem. Because this time, there are no political reasons leading to investor concerns (note that there was a 9 odd percent fall in the Russian markets when Mr. Gorbachev was overthrown, but there were no major fundamental economic changes then). What we have now is a once in a fucking lifetime situation where the most basic elements of finance have been casually neglected.

Risk and return are always interlinked. All Jacks know that. And yet, when it came to building the grand financial house that everyone has been living in since the last IT-led recession, they all forgot the equations. Balance sheets are still balanced, but with artificial values. Hypo, Fortis, WaMu and AIG have shown us that even institutions which deal in individual consumer money paid no heed to any risk management ideologies, and conveniently rode the sugar-coated mortgage gravy train. High risk, very high initial gains, and then one day they found termites crawling all over the foundation-less house...

Multi-multi-billion dollar bailout packages are suddently proving to be too less to hold the contagion. Within one month, economic slowdown has assumed higher priority than inflationary concerns, and as is always the case, governments are now racing against each other to see who cuts interest rates the most. The only problem with this solution is that it is inherently cosmetic in nature. It's like providing an analgesic to someone who has just been shot in the knee. The pain might subside for some time, but the wound will only fester if the bullet is not removed in time.

Is there any other recourse we can take to ensure the house is brought back up again? For now, Jack doesn't seem to have any answers...