On February 14, a day dedicated to the product of romantic love, Wall Street was not interested or feeling good vibrations: the Dow Jones and most other major stock markets around the world, finished down on fears of recession. Why so scared? On the one hand, Federal Reserve Chairman Ben Bernanke elected to announce that, despite recent encouraging news in terms of market, the subprime crisis was not contained, as he had predicted, they s 'were extended to other areas, Economy, particularly consumer spending. The recent decline in new jobs (a decline of 17,000, lost the first time since 2001, has been reported for the last quarter of 2007), coupled with the housing market deflated, it seemed a bit "away until ' The Fed announcement. Fortunately, the rate cuts are sure to be on the road, but that further rate cuts, always implies that the economy is worse than the average Joe might say, the investors have become more afraid of reassurance.
Another factor explaining theLoss of Valentine's for the bad news continued on Wall Street, with UBS reports more than 11 billion dollars of write-downs. If other markets finished down like that, most sales were related to the slowdown in America, which raises the question: How decoupled are emerging economies and other developed nations from this so -called U.S. recession? In the banking world, the risk is spread so well because pf how easily the mortgage debt of the United States could be repackaged in appearancesafest securities and sold to other nations. The test can be seen in the recent government bailout plan for German bank IKB difficulties and impairments of UBS growing. It can be concluded that rather than risk spread more effectively the tools of modern investment makes debt harder to follow (and therefore more expensive), and most companies are reluctant to cooperate because of their responsibilities to shareholders.
In other areas, the weak dollar, it is clear that spending in the United States, if not, Still exercises considerable power of arrest of growth for emerging economies. The only things that prevent the United States into recession, the dollar is weak and the recent economic stimulus tax relief enacted recently. This tax refund, when combined with initiatives for small businesses to invest, has the potential to slow down consumer spending. Although it was signed into law in record time, she may have been implemented too slowly to have maximum impactrecession. And "the debt has certainly increased, and now, only time will tell. Without increased efforts by central banks around the world, some relapse is the best possible scenario for all concerned. At worst, a sharp slowdown is not remotely image.
Many developing economies are already taking advantage of both the real estate slowdown and the falling dollar, investment, often in the form of SWFs, so that their products are directly related to actionstroubled financial sector. This means that, for once, these savings benefit unease many countries for the first time. Although it may be difficult to swallow, the United States seeks to recover quickly and with a little help it would be friends.
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