Market in Red, bleeds again... Can China save the world from the current financial crisis?

It got very scary as news of global market melt down started pouring down from all corners of globe, Asia,Europe, USA,Middle East, South America etc. Meanwhile, The OPEC (Organization of Petroleum Exporting Countries), whose member nations control about 40% of the world's oil, said it would cut production by 1.5 million barrels a day starting in November. The decision was made in an emergency meeting on Friday. Falling demand has helped drive oil prices down more than 50% since they rose to a record high of $147.27 a barrel in mid-July, which has alarmed many of the nations whose economies depend on oil exports.
Bombay Stock Exchange’s Sensex was at 8745.19, down 1026.51 points or 10.50 per cent. The index touched a low of 8657.17. National Stock Exchange’s Nifty was at 2540.05, down 13.50 per cent or 403.10 points. The broader index touched a low of 2611.15 (At 15:30 hrs IST)

Markets were under pressure not only from traders but market was abuzz with reports that some long only funds had turned sellers. Statements of assurance from Finance Minister P Chidambaram did little to change bearish sentiments. Finance Minister P Chidambaram said the RBI's policy decision to keep rates steady was on expected lines. He said the RBI would infuse liquidity and if required, would adopt conventional and unconventional tools.
Asian markets closed sharply lower.
Nikkei 225 closed 9.60 per cent lower,
Hang Seng fell 8.30 per cent and
Kospi was down 10.57 per cent.
Things were no better in European markets.
FTSE 100 was down 5.72 per cent,
CAC 40 fell 7.15 per cent and
DAX slumped 6.93 per cent.
US Markets

Markets Last Change
Dow Jones 8,691.25 172.04 1.98%
Nasdaq 1,603.91 -11.84 -0.73%
S&P 500 908.11 11.33 1.26%
U.S. stock futures tanked early Friday as fears of recession deepened a global market rout.
Dow Jones industrial average futures were down more than 500 points at 5:30 a.m. ET. S&P 500 and Nasdaq 100 futures were also down sharply. Futures measure current index values against the perceived future performance and can indicate how markets open when trading begins in New York. Concerns that the weak economy will crimp corporate profits pummeled overseas markets. Japan's Nikkei index tanked 9.6% and European shares plunged were down about 7% in morning trading. U.S. markets for the most part managed to overcome the earnings gloom Thursday. The Dow and S&P 500 both advanced while the Nasdaq slipped.
But trading has been volatile lately amid uncertainty about how deep the economic will be and how long it will last. Stocks to watch include software giant Microsoft (MSFT, Fortune 500), which reported solid quarterly results late Thursday but issued a cautious outlook.

Europe's Dow Jones Stoxx 600 Index lost 0.4 percent to 208.68 as of 4:50 p.m. in London, after earlier retreating as much as 3.3 percent. The index has plunged 43 percent in 2008 as credit-related losses and writedowns topped $660 billion in the worst financial crisis since the Great Depression. ``There is a recession in the U.S., and Europe, Japan and emerging markets are strongly impacted by it,'' said Dominique Netter, chairman of Edmond de Rothschild Asset Management, which oversees $36 billion in assets. ``The questions are how long will it be and what will be the severity.'' A late rally in energy shares lifted the market from its lowest levels of the day after Iran said OPEC should cut production.
Analysts have cut profit forecasts this year as the credit turmoil spread, threatening economic growth. Earnings for companies in the Stoxx 600 will decline 4.4 percent in 2008, down from 11 percent growth predicted the start of the year, according to estimates compiled by Bloomberg.
Bond Risk, Money Markets The cost of protecting corporate bonds from default surged to a record on concern that Argentina and Pakistan may default, worsening global economic turmoil. Credit-default swaps on the benchmark Markit iTraxx Crossover Index surged above 800 basis points for the first time, according to JPMorgan Chase & Co. prices. Credit-default swaps on Russian bonds soared to 10.5 percent a year for the five-year contract, from 9.5 percent yesterday, according to CMA Datavision. Standard & Poor's Ratings Services cut Russia's long-term sovereign debt rating outlook to negative because the cost of the government's ``bank rescue operation.'' The benchmark Micex Index tumbled 4.7 percent. The cost of borrowing in dollars for three months in London fell by the smallest margin in nine days as concern about lending intensified even as central banks pour cash into money markets. The London interbank offered rate, or Libor, for such loans dropped less than a basis point to 3.535 percent today, from 3.541 percent yesterday, the British Bankers' Association said. The overnight rate rose for the first time in 10 days, climbing 9 basis points to 1.21 percent. Asian rates increased for the first time in a week.
National Markets : Europe
National benchmark indexes fell in 13 of 18 western European markets. Germany's DAX sank 1.1 percent, while France's CAC 40 rose 0.4 percent s Essilor International SA and Total SA gained. The U.K.'s FTSE 100 added 1.2 percent, led higher by BP Plc and Royal Dutch Shell Plc, Europe's largest oil companies.
U.K. retail sales fell in September as rising unemployment and the specter of a recession prompted British shoppers to curb spending. In France, business confidence slumped to the lowest in almost 15 years as the global credit crisis worsened, threatening to deepen a likely recession in the euro region's second-largest economy. ABB declined to 13.75 Swiss francs after saying orders at the Zurich-based supplier of factory robots and power substations advanced 7 percent to $8.89 billion. That is down from 33 percent growth a year earlier and short of the $9.56 billion predicted by analysts. Net income rose to a record $927 million, also short of analyst calculations.
Commodities Slump in European Markets: Copper led a retreat by base metals on the London Metal Exchange, falling below $4,000 a ton for the first time since October 2005.
Credit Suisse Group AG declined 4.2 percent to 44.6 francs after Chief Executive Officer Brady Dougan said he's ``cautious'' on the fourth-quarter and expects markets to remain ``very challenging.'' The Swiss bank posted a third-quarter loss of 1.26 billion Swiss francs ($1.08 billion), compared with a profit of 1.3 billion francs a year ago. The result was in line with a preliminary estimate Credit Suisse announced last week. BP, the second-largest European oil company, advanced 5 percent to 465 pence. Shell, the biggest, climbed 4.8 percent to 19.50 euros. Total, the region's third-largest energy producer, gained 1.5 percent to 37.40 euros.
Crude for December delivery rose $2.37, or 3.6 percent, to $69.12 a barrel in New York after Iran said OPEC should cut production by 2 million barrels a day to stem the slump in prices. Futures earlier touched $65.90, the lowest since June 13, 2007. Nestle SA rallied 3.4 percent to 44.40 francs after the world's largest food company raised its forecast for sales growth and said nine-month revenue increased 3.4 percent to 81.36 billion francs. Essilor, the world's largest maker of eyeglass lenses, increased 14 percent to 31.59 euros after saying it doesn't expect the global economic slowdown to disrupt sales next year.

Can China save the world from the current financial crisis?
To give the answer right away: No. However, the nation with its more than one billion people and its strong economic growth may be able to offset at least some of the effects of the global financial meltdown. "At the moment China can only save itself and thus be a certain stabilizing factor in Asia," said Joerg Wuttke, president of the European Chamber of Commerce in China. He spoke ahead of the upcoming Asia-Europe summit (ASEM) which is running in Beijing. At the largest-till-date gathering of this kind, China will host almost 40 European government leaders and their Asian counterparts. "It is impossible for China to help Europe, Japan or the United States out of their troubles," Wuttke said. China's economy was still too small for that, despite being the world's forth largest economy after Germany, he said. But while the global crisis also has taken its toll on China, the country appears to be better prepared than others. In the first quarter of 2008, China's economy grew by 9.9 percent compared to the previous year, and even during the third quarter growth only slipped to nine percent, with decreasing demand for Chinese exports being the main reason for the slide. Investment banks corrected their projected figures downwards only slightly by between 0.5 and one percent to an expected growth of eight to nine percent for next year. These, of course, are still growth figures many other countries can only dream about. Until the financial crisis the government in Beijing was more concerned of overheating given the fast pace of economic growth, keeping one foot on the brakes so far. But now China's economic planers change course. On Sunday, China's State Council announced a new economic strategy: away from "rapid growth and inflation control" and instead towards "stable and rapid economic development." Under consideration are tax discounts to promote exports, and for banks to facilitate credit access for small and medium-sized enterprises. Additionally, domestic demand is to be boosted by increasing financial support to farmers. As the inflation rate unexpectedly dropped to 4.6 percent in September, fiscal policies could again be relaxed. While stocks may have lost some 70 percent of their value compared to the record high a year ago, the situation by no means reflects the real economic situation, as only speculation bubbles had burst. The same thing happened in the real estate sector, which had attracted a lot of so-called "hot money," money which is moved by its owners to China to speculate on the property market, while at the same time betting on a rise in the value of the Chinese currency. But those bubbles already had started to burst before the financial crisis hit. In comparison to other countries, China's domestic debt is relatively low, while the Chinese have the world's highest amount of savings. "China's problems are less lying with the stock market or non-performing loans but rather with energy inefficiency, environmental troubles and lacking quality of its products," explained Wuttke. Apart from industry sectors with excess capacities like the steel, cement and car industries, China overall still enjoyed a boom, he added.