What do you guys think? Is it the depreciating dollar? Credit? Commodities run-up? Discuss?
that’s all irrelevant noise… I’d go with either: rise of protectionist trade policies (populist gov’t policies) and lack of good math teachers in high schools.
Most serious issue is that we might have another republican president in office next year.
Nader is running. This is his year. I can feel it.
Or maybe throw all the Basel II and Six sigma garbage out the window and actually implement proper risk management? Citigroup? Maybe. Too specific. whats the biggest issue still affecting all the major markets?
US housing market
US housing maket is a valid answer. How bad will it get though? We’re far from the bottom. What about the greenback going down faster than Bill’s White House interns? With it being the dominant global currency, how long will other countries see their profits shrinking before they resort to drastic measures i.e. adopt the euro?
if I tell you, and you make a killing, can I get a cut?
Fear, inflation and monolines
The coming failure of a major bank. US housing markets are already well implied…maybe not so much for some of the other even high flyers like Ireland and Spain…I can’t speak to that.
The US has gorged itself on debt made possible by securitization whose risks weren’t as well understood as claimed. Now we have to cut consumption to meet payments, risk premiums have to shoot up even higher to compensate for previous rosy views, and so money for productivity investments isn’t really there either or is very expensive. So this recession is going to be very ugly for stocks, bonds, and the everyday American. And if Americans won’t buy stuff, non-Americans may well start to have problems selling stuff.
None, the debt market will rebound.
It’s impossible to say that the US housing market is completely priced in to global markets because no one knows how far things will fall. To me there is no other answer; more specifically the issue currently facing the markets is how far US home prices wil fall. The failure of a major bank, if it happens, would be the direct result of the US housing market. In fact pretty much every possibility proposed (other than political) in this thread is a direct or indirect result of turmoil in the US housing market.
Big Nodge - Couldn’t agree with you more. Looking at the bigger picture, I think risk managemet is still greatly lacking to deal with the new financial wizadry which has caused this crisis in the first place. So in short, could risk management be blamed for this whole debacle? or would that be too naive?
No major Banks will fall…Gov’t will not let it happen…Unfortunately or Fortunately, depending on how you look at it, the US Gov’t will come to aid of the financial institutions…but this will just delay the inevitable… Thank you Mr. Bush for spending so much money on war and forgetting about the domestic economy…Talk about filling ones own pocket and leaving a mess for the next poor sole…