My sigh of relief but......

WHEW!

The last few weeks have been exhausting. But even before that, we were all wondering when will we see the "bottom" of the financial sector problems.

Well to me, the "bottom" has come:

• Governments have recognized the magnitude of the problems - especially the interconnected cross-border nature.
  
• Governments recognize they have the power to solve problems.
  
• Governments have agreed to coordinate, and are coordinating.
  
• Governments have agreed on principles and priorities.
  
• Governments have developed measures to be implemented urgently.
  
• Governments have acted to solve problems, and promised even more action.

The uncertainty that paralyzes the credit markets and causes unprecedented market volatility does not impede the ability of Governments to act. Governments are certain about their mandate: they exist to serve the interest of people. After all these global coordination meetings, Governments are certain they are united in purpose, although naturally not in the exact measures for each independent country. So, the uncertainty that has plagued the credit and stock markets is frankly, some what immaterial, because the Governments can and will deal with that in a constructive manner - that was the value of the coordination. And there are certain principles that are non-negotiable for governments and governments have the power to do what they have to do to serve the interests of the people.

What are some especially positive indicators?

• There is so much global coordination I cannot write enough posts to keep up with the meetings, press conferences, communiques and news releases.

• There are so many countries that have agreed on common principles, that I stopped counting after the G7, G20, European Union, Countries of the IMF etc. Because that's almost everybody if I am not mistaken
  

• The measures are tangible - such as government guarantees for interbank lending.
  

• There are so many measures. A variety of measures are really a toolkit for countries to pick and choose to strengthen national financial systems without sacrificing the global financial system, or the welfare of other countries.

• World leaders are learning to communicate in ways that offend neither the people NOR the markets. Their words are decisive, urgent and solutions oriented, and quite frankly refreshingly different from the usual bickering over who caused what to whom.

There will be a new financial architecture.

• The world governments are committed to it. They send signal after signal that they are willing to exercise their immense powers for the good of the people, and the resuscitation of the system.
  

• I have noted the voiced concerns for the developing world. And I can only hope that that will be backed up with some action, and that the developing world will assert itself so that the replacement financial architecture is not worse than the previous dysfunctional financial architecture. I must admit I remain concerned about the leadership role of the IMF. However, the IMF said it was going to design new instruments and learn from the past. I am hopeful, only hopeful, that the instruments do not create more problems. But I must admit, I was pleasantly shocked to hear the IMF plead for aid for poor countries.

So, to me, we have reached the "bottom" of the financial sector crisis because we have no option. And if that means over the next few weeks or days drastic action is taken, I am fully prepared for it because quite frankly, the world leaders made it clear that there had to be an end, and they are in this together.

---------------------------

What's Next?

Now it is time to rebuild, because even though the banking system is so immensely critical, it is not the be all and end all.

Look at history: We had people before we had banks, and we had people before we even had money.

The rebuilding of the social fabric must be addressed.

• People have been shocked, frightened, and have suffered significant loss financially.
• People have lost their homes and their jobs
• People are still likely to lose their homes and job, even if the banking system is fixed.
  

So:

• Where are the social safety net measures?
  
• Where are the measures to ensure people can afford medicine, heating oil and food?
  
• Where are the temporary jobs?
  
• Where are the temporary measures to keep people in their homes?
  

You see, one of the problems with the sharp market declines and apparent free fall was the impact it was having in the real economy, savings, investments and the psyche of the people. Given a choice between worrying about the markets and worrying about the social fabric, it is clear which is a bigger problem. If the social fabric unravels, there are serious implications for domestic economic recovery and national security, before we can even consider global economic growth.

Back to a little more Bob Marley 101

In the song Jamming, Bob Marley said: "We're jamming" - which could be taken to mean in this context that progress is being made: The financial sector is on the way to reform.

But in the same song, Bob also said: "Life is worth much more than gold".

So bring on even more global coordination - careful, considered and constructive global coordination that the people actually feel, and feel quickly.