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World Markets

Posted by clioandme • 10/06/08 • Subscribe to this Discussion [RSS] • Report This Topic
Topics: Economy, europe, markets, world

I just tweeted some of this, but it might interest people here too.

Two German newspapers, the FAZ and the Sueddeutsche, are both using the word "panic" in their headlines about world stock markets. In France, Le Monde talks about "another black day" and Le Figaro has "historic collapse." In Britain, the Telegraph's headline cites "the worst fall in history" and the Times (London) talks about "global panic." According to the Neue Züricher (Switzerland): "Dow Jones drags Europe's Markets Deeper into the Basement."

I'm not sure which newspapers matter in other parts of the world, but you get the idea. If you're interested, you can learn quite a bit through the International Herald Tribune, which offers solid coverage for most major world regions. www.iht.com

User Comments

10/06/08

clioandme

Part of the problem in Europe relates to governments' inability to act in concert.

[reply]
1. 10/06/08
  
  polybore
  
  The members of the EU are starting to get on message now. The problem has been that EU states which promise to guarantee bank depositors balances in full put their banks at a competitive advantage.
  
  Depositors are looking for safe havens for their investments and are withdrawing their savings from banks without state backing and are putting them in state backed banks.
  
  The search for safe havens has also resulted in the flight from the stock markets. The talk now is of Capitulation were basically confidence in stock is so low no one will invest in it and the market free falls.
  
  www.bbc.co.uk/blogs/thereporters/robertpeston/
2. 10/06/08
  
  Manictastic
  
  Well, this crisis should shut up all those who think they can have economical integration without political integration. This is the recurrent trend in all newspapers, even the British. Europe just isn't politically integrated enough, everyone is trying to safe their own banks first and say screw the other countries. Ah well, Belgian banking is a thing of the past now.
3. 10/06/08
  
  clioandme
  
  You're right about the need for economic *and* political integration. This crisis shows how the latter goes way beyond foreign policy too. Ironically, by creating a unified currency, governments have also tied their own hands in terms of economic policy without, however, finding a suitable solution at a European level.
4. 10/06/08
  
  polybore
  
  Greater political union is required for the Euro to survive. The UK still has the option to devalue Sterling. Poorer countries in the South of Europe are going to struggle they don't have this option (devaluation) or the resources to bail out their economy.
  
  Angela Merkle's reputation has been damaged by this crisis. After her anger towards Ireland's actions on securing depositors money it is something of a surprise for Germany to turn round and out of the blue declare they are doing the same. (Although now Germany has clarified the conditions).
5. 10/06/08
  
  clioandme
  
  Do the British perhaps feel vindicated in this crisis by their separate currency and monetary policy?
6. 10/06/08
  
  polybore
  
  It is too early to say. The EU has not faced a crisis like this before. As has been pointed out member states have taken individual rather than collective emergency measures which is a bit silly when you share a currency. The EURO has done well during the boom years however it might not survive this bust.
  
  It remains to be seen if keeping the pound turns out to be a good or bad thing. The UK is going to be severely effected the financial sector is a major part of the economy and personal debt/ mortgage debt are very high. I would say that Sterling is at risk of speculation on the currency markets.
  
  One thing is for sure though, better inside the EU than out, Iceland faces national bankruptcy.
10/06/08

Anok

Well, our own stocks continue to drop like flies - and we have a lot of investments worldwide. It's no wonder. Everyone is going to feel it.

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10/06/08

clioandme

Interestingly and ironically, the misery of other countries is making the dollar attractive at the moment, meaning it won't be as hard or expensive for the U.S. to raise the $700 billion. Course a stronger dollar won't help exports, though maybe it'll reduce pressure on the price of imports. www.iht.com/articles/2008/10/06/business/dollar.php

[reply]
1. 10/06/08
  
  Manictastic
  
  Another good thing is that the price of oil is going down. This will ease inflation this winter.
2. 10/08/08
  
  Anok
  
  Actually Manic, it won't. Because we will be using oil and resources obtained when prices were very high, those costs will still be passed on to us. If I remember correctly, from CNN money, electricity will go up about 10%, natural gas about 18% and oil 23%.
10/08/08

clioandme

So the Fed has coordinated an interest rate change with central banks from other nations: www.washingtonpost.com/wp-dyn/content/article/2008/10/08/AR2008100800847.ht...
www.ft.com/cms/s/0/5fce75b2-949f-11dd-953e-000077b07658.html

Iceland just narrowly avoided bankruptcy.
www.npr.org/templates/story/story.php?storyId=95501984
www.ft.com/cms/s/0/33d5b2f2-9514-11dd-aedd-000077b07658.html

Britain undertakes "partial" nationalization of banks.
www.npr.org/templates/story/story.php?storyId=95501951
www.ft.com/cms/s/0/f6b5c7c8-952b-11dd-aedd-000077b07658.html

And Russia has closed its stock market for two days. www.npr.org/templates/story/story.php?storyId=95501969

Asian central banks are working hard to stop the hemorrhaging too.
www.ft.com/cms/s/0/4f3ff8d6-94f6-11dd-aedd-000077b07658.html

[reply]
10/08/08

xmarks

There is a risk of many countries going bankrupt. This might lead to some of those having dramatic increases in violence, both civilian and military sponsored. I don't think in terms of world war three but more in terms of World Riot One.

[reply]
1. 10/08/08
  
  clioandme
  
  Social stability will definitely be an issue. Already was last winter because of rising food prices.
  
  I have been paying attention to global news on this topic for a narrower concern, though: I'm thinking these problems point to the limits of our own bailout. In a global economy, it is not enough just to try to unfreeze credit in our own country.
2. 10/08/08
  
  xmarks
  
  I believe the bailout allows for Paulson to spend his money in any country he pleases. He will likely try easy liquidity in certain foreign markets too. Even though we are the biggest player on the block, all other countries are trying to do things to improve the situation too.
3. 10/08/08
  
  MidwestMom
  
  I'm thinking about the debate last night and the Russia question that was, to my mind, answered badly by both parties.
  
  Do you think Paulson or his successor could use monetary policy to pressure Russia (or other countries currently in crisis) on humanitarian issues? Now that our economies are so interconnected, it seems like a more ready "weapon" than bullets, especially if the dollar is stabilizing.
4. 10/08/08
  
  clioandme
  
  The last thing we want to do is use economic pressure at present. All countries would be wise to acknowledge their mutual dependence and start acting accordingly. FYI, today Russia appears to be pulling out of Georgian territory outside of South Ossetia as per the agreement.
  
  Also, I have been disappointed by Obama's answers on Russia. He's let McCain set the terms of that debate. Regardless, whoever is president will have the European allies to consider too, and he'll have to do it in this new economic context. My sense is that both campaigns are still struggling to catch up with the full implications of that context, though Obama is getting there faster.
10/08/08

cooper

My brother is a financial analyst for the world bank, he usually works out of D.C. but travels a lot, he was whisked to Italy last week, and now whisked to Tokyo, my future SIL fears she may never see him again. I hope he gets to come home soon to fill us in on what he knows of all this, but all this whisking off in the last couple weeks doesn't give me a good feeling as usually his trips are well planned out in advance.

[reply]
10/09/08

clioandme

The Dow's not the only thing down to 2003 levels. German export levels are at their lowest level in five years (source, in German: www.sueddeutsche.de/,tt2m1/wirtschaft/583/313490/text/). And if you're thinking, so what? Remember that we're talking about one of the world's biggest economies. (Was no. 3 in 2007 after the U.S. and Japan, though Maybe China is shaking up these rankings. siteresources.worldbank.org/DATASTATISTICS/Resources/GDP.pdf)

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