The Economist 24January 2008 edition

The Cartoon taken from this magazine:




THE financial storm that blew up in America's subprime mortgage market last year has become a
hurricane. The ill wind from reckless property lending blasted first the market in asset-backed securities,
then banks' balance sheets and, most recently, stockmarkets. Across the globe, more than $5 trillion has
disappeared from the value of public companies in the first three weeks of January. Many markets are
20% or more below their highs, the informal definition of a bear market. On January 21st share prices
plunged from Brazil to Britain in the worst day of trading since September 11th 2001.
Although America's exchanges were closed that day, its policymakers' response was more than
commensurate. Before Wall Street opened on January 22nd the Federal Reserve announced an
unscheduled rate cut of three-quarters of a percentage point, to 3.5%, its fastest easing in a quarter of a
century. A day later the New York insurance regulator and leading banks began work on a multi-billiondollar
plan to rescue the country's teetering bond insurers. As the markets pitch and yaw the pressing
question is whether central bankers and regulators have acted with swift prudence, or ill-judged panic.

Read More