The Smell of Blood in the Financial Markets

Financial markets are in turmoil. Shares of banks are going down. European bonds are paying out record rates. Big corporations are announcing layoffs.

Tuesday, July 19, 2011

The global financial system seems to be heading towards another major crisis, and it could be worse than in 2008. At that time, the United States’ national debt was below $10 trillion, whereas now it is over 14. In 2008, none of the European countries was on the verge of financial collapse, while today many are.

If the global financial system begins to crumble, the major world governments can not do anywhere near what they did to tackle it last time.

In 2008, the crisis began with declines in shares of major banks, a situation that seems to be repeating itself now. Bank of America reached rock bottom last year, Goldman Sachs and Morgan Stanley are close to the lowest levels of the last 2 years, while Moody's warned that it might be forced to reduce the risk ratings of Bank of America, Citigroup and Wells Fargo. And all three of them are planning or implementing layoffs.

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Costa Rica and the Effects of an International Crisis

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A report by Aldesa analyzes the effects for Costa Rica of a potential international crisis.

According to Aldesa:

During this week the market has been permeated by an air of positivity due to expectations that European authorities will solve the problem of the debt crisis. However, if more events occur, there would still be risks for the global economy that could trigger a slowdown in the U.S. and Europe.

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A decade ago debt issued by European countries benefited from mostly high grades and attractive ratings, which helped them maintain high prices and low yields.

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This week, the news is about the continued crisis in the US financial sector and its impact on the economic sectors around the world.

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