The lack of a reliable and predictable mechanism for the orderly liquidation of failing US companies seems to have accelerated, not eased, investor nervousness. Without an orderly, predictable, and rational process for liquidating failed businesses, volatility will only worsen.
A functioning, rational regulatory structure, adapted to new global finance realities and competent to identify risks before they threaten financial foundations may be a neccesary condition for the return of market stability.
And some entity constructed to assess, evaluate, and regulate new financial instruments---including their legality and potential for abuse---in real time might prevent future interruptions.
Meanwhile, many global financiers and investors are afraid of who might be next. That question seemed to be answered early this evening with the news that both Morgan Stanley and Washington Mutual are on the shoals, unable to withstand the headwinds of this week's global financial storm.
Foreign spectators wondered when the US government might address the underlying systemic roots of the current financial collapse: dropping US industrial output, rising under- and unemployment, mass layoffs, instability in housing values, poor regulatory structures, lagging wages, widening gaps between the very rich and poor, middle class decline, the outsourcing of jobs, wide inequities in the educational system, and lack of comprehensive medical and dental insurance for many American workers.
US President George W. Bush is holed up in the White House apparently refusing to address the American public in a prime time television address as is customary in times of crisis.
Moreover Republican candidates across the slate are refusing to identify with their own party---the so-called ideological champions of capitalism, entrepreneurship, free markets, small government, and less regulation---in an extraordinary attempt to dissociate themselves from their own brand name.
Inaction on the fundamentals likely means more financial chaos. Asian markets remained down across the board on Thursday indicating that the US and other governments intervention to stabilize markets have either been too little, too late or have failed to restore investor confidence.
Those issues, it appears, can not even be contemplated before the November US presidential election, and the inauguration of a new American leader in 2009.