We are in a bear market for risk assets. Numerous hits to the financial sector are still to come that will keep global liquidity shrinking and asset prices under pressure.
Central bank actions have been successful in normalizing inter-bank rates and Federal Reserve chairman Ben Bernanke will make more interest rate cuts. Also, the US administration has introduced a large fiscal policy boost. But the credit crunch is not over and it will continue to weaken the real economy and the balance sheets of the financial sector.
Losses in the financial sector from the sub-prime crisis have reached $150 billion. Many US financial institutions have had to recapitalize themselves through funding from strategic investors (turning to the foreign sovereign wealth funds), cutting dividends, undertaking share buybacks and cutting the workforce.
But there is still much further to go. Although Libor spreads have narrowed, the crunch in the rest of the...
You do not currently have access to this content. To gain access visit the subscription page or call our hotline on +44 (0)207 779 8999.
If you are a trialist or subscriber, please enter your username and password at the top right-hand side of euromoney.com
Subscribers to Euromoney benefit from:
Level 1:
- Online access to the past 12 months content
- Tailored RSS news feeds direct to your desktop
- News delivered directly to your mobile device or PC
- Personalised email newsfeed of 'Top stories' and 'Breaking news'
Level 2:
- Exclusive access to euromoney.com - Read the latest issue early online, search for specific developments by region or sector, interrogate the results of Euromoney's benchmark polls, and view the archive dating back to 2000
- 12 monthly issues of Euromoney magazine
- More than 30 specialist research guides free
- The results of Euromoney’s polls and surveys
- Tailored RSS news feeds direct to your desktop
- News delivered directly to your mobile device or PC
- Personalised email newsfeed of 'Top stories' and 'Breaking news'
Click here to subscribe