Quote:
Originally Posted by SamIam
Are the forces that are causing the drop in US markets the same as the ones causing the drops in other countries? Or are the world markets playing follow my leader with the US?
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Some countries invested heavily in US equities. For example, if I remember, Iceland has a $14 billion economy. But its banks were holding something like $210billion in assets. Those three banks needed a government takeover do to (in part or full) so many losses in their American investments.
Australia, according to what others have posted, has little invested in US equities. However, we know this American mess will create an American recession of unknown dimensions. Therefore China will need less coal. IOW China will use more domestic coal and less Australian coal. So how badly will the Australian coal industry (that had based future market predictions on full coal production) suffer?
Whereas uncertainty causes American equities to drop excessively, the same unknowns for Australian coal (and other Aussy commodities) create uncertainty in Australian export industries. These examples duplicated by the millions all over the world.
Eventually all markets will discover new valuations and how much damage exists in their markets. Previous financial market failures (according to history) take about four years for that economy to recover from.
This is not a time to worry. This is a time to learn so as to prosper from your losses AND to learn about this when it happens again typically every 30 years.