COMMENT
3
Fiscal fiasco finds focus
Recent events in the financial world have left no doubt that something is rotten
in the world of money. The last year or so has seen some financial analysts
predicting such a fallout but none could have foreseen the big names at risk.
Unfortunately the turmoil will spread as investors will be very cautious of a
money market that even traditional users are having trouble keeping faith. In
retrospect it seems unfathomable that so much of the USA’s mortgage market
could have been in the hands of so few. This problem is repeated in much of
Europe and Asia and the potential for disaster is now obvious.
The sad thing is that it is not news to many financial wheelers and dealers and
many knew that this problem eventually had to occur. You can only keep
moving debt from one pot to another and all those who joined in this explosive
game of pass the parcel knew that eventually the music would stop. There has
been many legal loop holes jumped through and created over the years in
mainly the Western monetary system as unscrupulous companies and
individuals found there normal get rich schemes close up as the financial
Comment
markets became more regulated in light of the last scandals, circa Enron era.
The most successful investor in the USA, Warren Buffet even tried to warn
investors away from the stock market earlier this year as his prescient vision
gave him clues.
The next thing to keep an eye on is how far it will spread geographically. There
is no doubt that countries like the USA and the UK will see a spreading of the
turmoil within their industry. What is less likely to predict is how well will the
growing Asian markets survive the fiscal fiasco. With so much of teh
semiconductor markets and associated industries now based in Asia, it could
be the light for belegured companies.
The fallout has already hit the industry with companies like NXP announcing
huge job cuts, but not as many as HP plan. The problems at NXP are caused
mainly by their own internal debt problems and is another casualty of a
financial market and investors believing they knew more than everyone else.
Every company needs to make money to survive but if the focus is too rigid
towards that goal then the company will suffer. Short term gains and long
term fools.
Despite the real threat of
global financial problems,
semiconductors will
continue to be made and
business will exist. It is the
time when long term plans
kick in.
David Ridsdale
Editor-in-Chief
October 2008 www.euroasiasemiconductor.com
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