The global economic troubles worsened today as major markets around the world have fallen 6-10%. The situation has deteriorated to the point that the worldâ€™s financial ministers and central bankers will meet in Washington this weekend in an attempt to coordinate a global response.
Unfortunately, no one really knows what will calm global markets. On the heels of the United Statesâ€™ $700 billion bailout package, countries from Japan to Britain to China to Iceland have made serious steps to shore up their nationâ€™s banking system by infusing money into the system and/or cutting rates to encourage lending. So far, stock markets have shrugged off such maneuvers and continue to fall.
I keep hearing references to the Great Depression. And while I am nervous about the current situation, I also know our nation and most other nations are taking steps never even considered in 1929 and the early 1930â€™s. We have likely already reached or will soon reach the natural bottom of this market correction â€“ any greater declines will be panic based. So, the key is to stop the panic before it snowballs.
Hopefully, this weekendâ€™s meeting in Washington will come up with ways to do just that.