Wall Street Storm: Charles: A Gamble Without Risk Aversion

He is also the editor and chief contributor of the Facts On File (2005).

Since 1985, he has served as a professor of finance at the University of Manhattan in New York and has provided consulting services to several financial institutions.

The candidate went through a particularly dirty election and finally won a seat in the Senate.

When he was told that he had won the election, the candidate asked a naive question: "what should we do now?"

Every day seems to have new answers, and every day the market is still not moving.

After the nationalization of two houses (Freddie Mac) and AIG, and the collapse of Lehman brothers, few people were prepared for the complete paralysis of the subsequent credit market and the sharp fluctuations in the stock market.

Congress did not help because of the dirty dispute between the 700 billion intervention programmes.

Similarly, the Fed's announcement that it has begun to buy commercial paper has not been effective.

It seems that the US authorities are already at risk of dealing with the crisis.

Today, people begin to discuss the possibility of another economic depression, which seems to be inevitable.

People's swaying emotions show a wide view in the stock market, and the volatility of stock prices in a day can often compete with the performance of 1929.

Hedge funds have unlimited liquidity in the world. Iceland, as a small country, is suffering and is on the verge of collapse.

The central banks of various countries have really been in step by step, and joint efforts to cut interest rates are the first time in 1987 after the dramatic intervention in the name of the US dollar.

Although credit markets ignore this action, they will eventually realize that joint action is beneficial to every participant.

Over the years, especially after the collapse of the Soviet Union, the word "globalization" has been arbitrarily commandeer, and the world is moving towards a common big market. The way to enter the market is hard to imagine before.

If globalization is still a dream for manufacturing and service industries, it is close to truth in the financial industry.

Over the past 15 years, the boundaries of the financial world have shrunk, either good or bad.

Money borrowed from a country's currency can easily be leveraged to another market, and paction costs are lower in many cases than in the past.

Even individual investors have been involved in this paction.

Buyers in Iceland and Romania can borrow Japanese yen to purchase real estate, which is not substantially different from the behavior of hedge funds, but the latter's pactions are much larger.

The interest rate of yen not only has great significance for Japan and interbank lending market, but also has an impact on an unprecedented broader investment entity.

Under the background of the financial barrier's passing away, any behavior that ignores the international early-warning signal will seriously injure the financial health.

Unfortunately, the leverage of companies and bank balance sheets is also reflected in family bills in the United States.

If the decline and daytime fluctuation are indicative, the recession will not be the main concern.

This view was not so daunting a month ago.

Credit markets and banks have steadfastly refused to provide loans to one another or others.

This is disastrous for a society built on credit and leverage.

Even if the current problems will disappear tomorrow, consumers and companies will have to spend years trying to get rid of the habit of borrowing money before them.

This is a sign of surrender, because the market has been complacent in guiding the economic indicators of the developed society, and has always despised the way the government interfered in their way of making money.

Now, even the hint of G-7's intervention can appeal to the market because its sense of direction for the future has been lost.

Over the past 30 years, government regulators have played the role of part-time traffic policemen in front of Wall Street, satisfied with the direction they need only when Wall Street needs them.

In 2004, the securities and Exchange Commission (SEC) succumbed to the request of top investment banks to lower their capital requirements so that they could invest free capital in risky mortgage securities markets.

The consequences are disastrous, for all those involved in it, and SEC's image as a street corner policeman is tainted with perpetual blemishes.

Some difficult choices are unavoidable.

If G-7 agrees to inject funds into banks through direct purchase of equity, they need to prevent hot money from flowing away from their good will.

There is no reason for us to agree to let the UK nationalize its banks, but let the us take another path.

The flow of funds to Britain may create another dilemma similar to that of Iceland.

Hedge funds may complain that this violates their right to free investment, but if their actions are enough to offset policy decisions in an emergency situation, the right to pfer funds should be restricted by temporary capital control measures.

The short-term investments borrowed from billions of dollars have brought about a setback to the financial system.

When thousands of depositors in Britain lose money when they are in Iceland's branches in the UK, and when the Iceland government has nothing to do with depositors, we should ask what leads us to such an unbearable situation.

If borders need to be protected before hedge funds, it is time to put up barriers.

Unless regulators and finance ministers realize that the current situation is strategically and financially important, the proposal to restrict hedge fund flows is hard to implement well.

Sadly, incomplete solutions have not yet touched the market, and the more complete they are, the less likely they will touch the market.