AUGUST 11th 2007
There is nothing strange about the current fall in stock market prices. It is the logical result of fund-managers, banks  and hedge funds seeking a belt an braces approach at the same time as continual growth, causing the belt to snap and the braces to let the trousers down. It is a case of economic obesity. The property market, including the so-called sub-prime market which encouraged lenders to believe their money was secure even if the borrower was or became insolvent,
regardless of how many people were in the same position, had become fatally interlocked with the overall global measure of liquidity.

So there is a shake-out, the result of which will be to remind fund managers there is no free lunch and no belt and braces, because demand not backed by purchasing power is not economic demand, and property is a liability as well as an asset.

It will take a while for the dust to settle, the resulting situation will be healthier. See file on INFLATION where this shake-out is anticipated.

NOVEMBER 2007 see also Northern Rock