Ali’s blog

Mostly quant stuff with occasional digressions

Another rocky day for the markets

Posted by alifinmath on January 23, 2008

From the FT:

Wall Street was once again deep in the red at midmorning on Wednesday, and stocks faced the prospect of extending losses for six straight days amid some downbeat earnings guidance and concerns that a fully fledged bear market looms.

Ted Wieseman, economist at Morgan Stanley, said the inability of the global economy to decouple from the US meant investors “will almost certainly be looking at a deeper and more protracted US recession.”

But the global economy will have to decouple from the moribund US economy — an economy that is hollowed-out and living on borrowed time and money. The decoupling will be painful for countries such as China and Japan (and overseas investors generally) holding dollar-denominated financial assets, with these assets losing at least a major chunk of their purchasing power. The next few years will be turbulent. A new global order will probably emerge but not a settled one as there is no power around that can (or wants to) assume the mantle of military and economic hegemony.

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One Response to “Another rocky day for the markets”

  1. Anonym said

    Steve Clemons, whose judgment I respect on issues of global politics agrees that we once again live in in a multipolar world (or, more accurately, Americans will increasingly come to recognize that extant fact.)

    http://www.thewashingtonnote.com/archives/002728.php

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