What is truly vital in the current historical moment of absolute uncertainty is to make our way day by day by resisting the total chaos in which all markets and sectors could fall. In other words, for almost a week now it has been globally accepted that we are in a critical situation in the System. And yet ministers, central banks and the top managers of the world's largest financial institutions seem to be working together towards a common goal: to avoid the chaos that would ensue if the crisis that began in the US mortgage sector were to spread to the rest of the economic system, bringing it crashing down like a house of cards. By this I do not mean that the world economy has no solid foundation to stand on, but that widespread panic would accentuate the destructive effects of the collapse of some investments that are made of ethereal and contagious products. We talked about this type of investment based on financial engineering that is too far removed from economic reality in a previous post. Curiously, we already warned then, exactly on 20 June, We were also aware of the sense of danger or uncertainty that we were already detecting at that time. Although we did not say that the trigger was the US mortgage risk, we did mention a scenario like that of the 1929 crash or a globalised crisis.
In spite of everything, it seems to us very positive that the tools of the global financial system itself continue to be applied to alleviate as far as possible the crisis that the entire economy is going through. More importantly, the first voices are beginning to be heard in favour of greater control of high-risk financial operations. This is positive in itself, although obviously no one has any idea yet who and how this should be done.
Let's continue to live history with serenity and intelligence, and let's clean up only what is necessary without spoiling the rest of the Economic System. To be continued...