Fear, panic and paranoia, you could be forgiven for thinking these were the headlines of a Hitchcock movie. This particular version of Vertigo is currently playing, however, across Wall Street and the Square Mile. Recent events have shown to what extent those precious commodities of trust and confidence are in extremely short supply when it comes to financial trading. The recent Tsunami that washed over HBOS, managing to wipe 1/5 off its share value and sending out seismic shock waves, apparently emanated from Singapore via a malicious e-mail. Whilst reaction was swift on this particular occasion, it had not always been so and what is interesting to note are reactions either side of the Atlantic to this growing crisis of confidence. Whilst the British Government seemingly allowed Northern Rock to slide slowly but surely into the quagmire of nationalisation, the US government raced with alacrity to broker a deal to save its 5th largest investment bank, Bear Stearns, even if it had to rebroker this weekend. Proactive or reactive seems to depend on which side of the Atlantic you find yourself. Fear is insidious and these events take us into unchartered waters, questioning the very architecture of capital market systems. As this weeks see its quota of nerve shredding reports on housing prices and business confidence, it looks as though it’s going to be a savage journey (my apologies to Hunter S. Thompson).
