Atlas Shrugged
Photo: AFP
"Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned." - W.B. Yeats, The Second Coming.
When the Irish poet W.B. Yeats composed his masterpiece, I cannot imagine he was thinking of Wall Street, much less sub-prime. Rather, he was describing a Biblical event possessing immense destructive power -- one originating from a localised centre and quickly spiraling out of control to engulf the world -- raining misery upon millions of innocents.
Fifty years later, however, it is hard to find words more appropriate than these of Yeats' to characterise the financial crisis the world is in the midst of today. While the US is at the focal point of this magnitude 9.0 financial earthquake, after-shocks are quickly engulfing capital markets and economies across the globe. And even Bangladesh, thousands of miles away and innocent of any responsibility for the original events, is nevertheless threatened with its consequences.
To panic or not to panic
In this age of 24 hours media exposure, CNN, BBC and Google broadcast the news and pictures from across the globe into our homes and offices. Though far removed from the epi-centre of this financial tsunami, Bangladeshis cannot escape the visuals of the unfolding disaster. Panicked Londoners lining up at the doorsteps of failed banks, New York stock traders staring helplessly at their computer screens as trillions of dollars of wealth is wiped out, tearful workers from Iceland to China walking out of factories closed forever -- these are the pictures streaming across our TV screens every night.
When you combine such emotion-filled information with the human instinct for self-preservation, and add to it an element of uncertainty, there is one natural outcome: panic. Panic is sometimes an appropriate reaction to danger, but it can also trigger irrational behaviour that is ultimately self-destructive.
On a mass scale, panic can lead to bank runs, stock market collapses and social unrest. And if you think this is far-fetched, consider the following: in our neighbouring India, a large and well-capitalised commercial bank was recently the target of rumours that it would collapse from the effect of the global financial crisis. While the rumours ultimately turned out to be false, it took extraordinary intervention from the central bank and political leaders to calm panicked depositors. From Bangladesh, I have already received phone calls from friends and relatives asking which Bangladeshi banks are safe and which are at risk of a failure "like the banks on TV."
Arm yourself with information
The only real weapon against panic attacks, besides taking sedatives, is to educate oneself of the issues. Once you understand what is going on, and how it impacts you, it is easier to make rational decisions to protect yourself from financial harm. And toward this end, I hope this article will help, by: (1) enhancing your understanding of the root causes of the current financial crisis, (2) mapping out how the events are unfolding, (3) predicting what can happen next, and (3) analysing the consequences for Bangladesh.
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