Asian stock markets continue to tumble
Hong Kong (AsiaNews) – Asian markets continued their free fall for the third straight day today, despite a last minute recovery on Wall Street, yesterday, limiting its losses to 0.12%. What remains yet to be seen is how the global economy will react and to what extent Asia will result dependent on the United States.
In Tokyo the Nikkei index lost 5.4%, the heaviest loss in a single day since April 2000, falling to its lowest level since 2007. In Hong Kong, the Hang Seng fell by 3.3%. These losses were echoed by Singapore (- 5%), Seoul (-3.2%) e Mumbai (-2.94%), Shanghai fell by 2.28%. Losses on the Asian markets were far heavier than those registered by Wall Street, which triggered the train reaction, causing out and out panic in many markets.
For some time now experts have observed that spending in the United States far exceeds earnings, deepening the commercial deficit and increasing public debt. Mortgage debts have grown to such an extent that lenders fear they will not be able to recover their capital: in July Ben Bernanke, President of the Federal Reserve Board USA, told Congress that financial institutions risk loosing between 50 and 100 billion dollars in loans. Meanwhile unemployment in the country has risen to over 4.6% and shows no sign of slowing in the coming months. There are those who speak of crises along the lines of 1997 and 1987 and say that the problem is a structural one.
In attempts to unblock the liquidity crises and avoid an increase in interest rates, last week the Central Banks in the United States, Japan Europe and other states pumped billions of dollars in liquidity onto the markets. Yesterday Japan’s central bank introduced 1.2 trillion Yen (10.7 billion dollars). But even if his can contain interest rates in the short term, it adds to the risk of inflation.
On one hand some analysts note that the current crises is taking place in a global scene where Washington’s central power is of decreasing importance and the dollar loosing value, while the importance of emerging Asian nations continues to grow, above all Beijing with its immense monetary reserves and the Yuan kept artificially low. Other experts maintain however that even after 30 years of uninterrupted growth, the Chinese economy among with many other Asian nations including India depend heavily on exports, first and foremost to the United States. Thus an American recession would have devastating effects on the entire Asian economy.