SO FAR, 2016 has been something of a disaster around global markets. Equity and commodity prices have been hammered. Yields on safe government bonds are plumbing extraordinarily low levels. Investors seem to be terrified. But of what?
Recession talk has increased, but real economic data in most countries don't look especially bad (though they are backward looking, and enough market pessimism can at any rate turn self-fulfilling). Some suspect the mess is a reaction to troubles in the European banking system. European bank shares are tumbling, ginning up bad memories of the financial crisis. But while European banks have their problems (and could create many more if the European economy sank back into serious recession) it does not look like the cause of current market jitters. European banks are better capitalised and have access to massive amounts of liquidity thanks to the European Central Bank. This is not a situation like 2008, when markets doubted banks' solvency, banks struggled to fund themselves, and credit markets...Continue reading
from Economics http://ift.tt/1O4BSl3
via IFTTT
No comments:
Post a Comment