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.

¿Busca soluciones de inteligencia comercial para su empresa?



More on this topic

Costa Rica and the Effects of an International Crisis

September 2011

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.

Rating Agencies Questioned

July 2011

While in Europe ratings go down and in Latin American they go up, the opinion of the agencies is starting to be looked at with different eyes.

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.

The IMF's prescription for Honduras

July 2010

Gradual increase in exchange rate flexibility, supported by fiscal consolidation, wage moderation, and a prudent monetary policy.

On July 12, 2010, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Honduras.

Background

Some effects of the financial crisis in Guatemala

September 2008

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

At the time of this writing, one of the main investment banks (Morgan Stanley) was about to enter negotiations for its purchase by a Chinese bank.