Latest October revolution

The financial world wakes up with bated breath this morning under the shadow of a simple question: Will anything at all work to change the mood of the global stock markets? Last week has been dubbed Black Week, outdoing Black Monday of 20 years ago. Share prices have been in free fall without rhyme or reason.

Panic has taken over. Every move made by the national authorities is brushed aside, including a concerted interest rate cut many analysts and business communities have been pressing for even before the financial crisis plunged to last week's depths. In part, the acceleration in the crisis has been put down to an absence of strong leaders, like Churchill, Roosevelt and even the detested Stalin, with Russia joining in the collapse.

Fuel had been added to the roaring crises because governments, including those of the EU, have dithered and acted independently, rather than in concert. Now they are trying to make amends. Early over the weekend the most industrialised countries, known as G7, agreed to coordinate measures to try to restore confidence, if need be by nationalising banks that look as if they are going to fold under continuing pressure. One has to see whether the markets will take heart.

Amidst all the gloom there is hope. Many investors have been selling shares as the banks have been refusing to lend to each other, thus factoring in dried-up liquidity into the crisis. But somebody must be buying. There are those who see opportunities at times like this. And they are not only the pundits interviewed at all hours by round-the-clock stations like Bloomberg.

The Guardian newspaper recalled two revered pieces of advice on Saturday. Sir John Templeton, a renowned pioneer of mutual funds who set up the Templeton group of asset managers (he died in July), used to give simple advice: Buy at the moments of maximum pressure. The second pearl of advice comes from a current persevering source. Warren Buffet, a legendary asset manager who was last week named the top business billionaire by Forbes magazine, couldn't be more eloquent: Be fearful when others are greedy and greedy when others are fearful, he says. Mr Buffet has been backing his philosophy with the money he manages - amidst all this turmoil he has been buying, albeit as always very selectively. The basic consensus, in fact, is that people are acting irrationally and one should not follow them in a rush like that of the Gadarene swine. Eventually, markets will become rational again and those who hold on to good value stock will reap the rewards.

Maltese investors owning foreign assets, directly or in collective investment schemes, have been hit for six or more, like everyone else. Investors in local shares have also seen them drop sharply, in some cases to what appear to be ridiculous levels. Such investors may or may not take heart from the advice of Sir John, Mr Buffet and others who believe in counter action or from those who hold that rationality will return to the markets. I do, but to each his own.

At least, amidst all the mayhem, we continue to count our blessings that Malta's financial institutions have not been foolish like so many foreign ones, where greed made managers lose all perspective.

It will take time for the consequences of this particular October revolution, which has hit the capitalist free market system more than Marxism ever did, to pass. But pass they will, as they did almost 80 years ago with the Great Slump in America and the Great Depression that followed and wracked the global economy. The thing to observe some years down the line will be whether enough people have learned that freedom that leads to massive abuse is not freedom at all.