Tuesday, October 07, 2008

All Is Not Well

The government came out insisting yesterday that all is well in the financial market. The market keeps plummeting. Till when the government is going to insist on this line and not intervene? Even if all is well as claimed, confidence is lost in the market.

Immediate action is required mainly on two fronts. First, the central bank needs to wake up and actively inject liquidity into the banking systems as well as loosening restrictions on lending. The second, while the Kuwait Investment Authority rushed in markets abroad to save some financial institutions, it should look at opportunities at home and save the financial market.

I am not usually a proponent of government intervention, but in this case the cost of not doing so would be far reaching. Time to stop living in denial before it is too late and the cost is much higher to fix things.

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