The World and the U.S. Financial Crisis
Sep 30th, 2008 by noidion
Markets around the world are reacting to the recent events in the U.S. markets. Brazilian newspapers are reporting that oil prices are down. This is bad for Brazil, but good for the U.S., as The Gazeta Mercantil reports: “Brazilian exporters have started to be affected by the global credit shortage. The sector relies on Advances on Exchange Contracts (ACC)” (similar link)
According to this article, the financial crisis in the U.S. has caused a lack of trust in foreign markets/economies. Those outside the U.S. are expressing skepticism regarding the market. Instead of investing in foreign markets earlier in the year, which seemed like a sure fire way to make money, more investors are taking the route of investing in bonds instead of directly with companies.
Vale Mining Company, which is based in Brazil, has experienced a drop in share prices from 59.22 reals to 33.72 reals in just four months. Again, this has been affected by people having a lack of trust in the global markets. “All that has to happen [for further stock market declines] is for companies to start to have problems exporting,” said Goes. “There is a lot of uncertainty out there and there is not a company in Brazil that can withstand this crisis. People are afraid of risk.”(BNAmericas)
South American markets are not the only ones affected by the U.S. current market. According to a report in the Economist, China is worried about a weakening export demand. The report says it has dropped 11% recently. The report notes that Hong Kong’s largest property companies say “confidence ended this week with the fall of Lehman,” a comment that may be related to the fact that the U.S. is one of the biggest importers of Chinese exports.
Understandably, people outside the United States are also watching their money very closely. As one of the strongest national economies, America’s recession is affecting other markets and economies around the world. As a country, we need to remember that with power comes responsibility and respect for other people’s economies. We need to make sure that whatever steps we take to bail ourselves out of the current situation, the choices of the U.S. do not negatively affect our global neighbors that are struggling during these times as well.