首页
登录
职称英语
Bears in the Woods Despite the troubled market
Bears in the Woods Despite the troubled market
游客
2023-07-31
36
管理
问题
Bears in the Woods
Despite the troubled markets, the world economy is still relatively strong. Just don’t bet your house on it.
The woods and the market
If you meet a bear in the woods, try not to panic or scream; on no account should you turn your back and run. As markets around the world have turned grizzly over the past two weeks, some investors seem to have forgotten the old hikers’ maxim. After three years of big gains, many stockmarkets have dropped by 10% or more in less than ten days. The loudest complaints have echoed around emerging markets and commodities. Europe has surrendered most of this year’s gains. Americans have so far escaped lightly, but they would be unwise to take comfort. Their housing market, the recent rock of their economy, is where a much grizzlier creature lies in wait.
Most investors tend to look first at equity markets---and they have certainly had a good run virtually everywhere. Yet a repeat of the slump after the bursting of the dotcom bubble in 2001--4)2 remains highly unlikely. In 2000 shares were wildly overvalued. Today price/earnings ratios in most stockmarkets are near, if not below, their long-term averages. This suggests that the slide in shares could be short-lived.
Inflation or interest rates?
So what has caused this burst of volatility? One popular explanation points to the fears of rising inflation and hence higher interest rates. Yet this sits oddly with the decrease in bond yields and the gold price over the past week: if inflation were the reason, you would expect both to have risen. The real puzzle is not why volatility has suddenly increased, but why it had been so low in the past year or so. The answer seems to be an abundance of cheap money, which attracted investors into satisfaction. Now they are starting to demand higher returns on riskier assets. Emerging-market equities, not (generally safer) bonds, suffered the biggest loss in the past week. It could be a healthy correction, though.
What helped us to achieve growth with low inflation?
Indeed, the recent sensitivity need not harm the world economy, which even bears admit has performed greatly. World GDP has grown at an annual rate of more than 4% for 11 consecutive quarters. This is the strongest upturn for more than 30 years. Yet global inflation remains historically low. Strong growth with mild inflation is all the more amazing given the tripling of oil prices since 2003. Past off-price shocks have caused stagflation.
The world has so far shrugged off higher oil prices with the help of two powerful economic forces. The first is the opening up and integration into the world economy of China, India and other emerging economies, This has given the biggest boost to global supply since the industrial revolution.
That, in mm, has magnified the second stimulus. Since the bursting of the dotcom bubble, central banks have pumped out cheap money. In 2003 average short-term interest rates in the G7 economies fell to their lowest in recorded history. Because inflation remained low, the central banks have been slow to mop up the excess liquidity. Cheap money has encouraged households, especially American ones, to borrow and spend lavishly. It is not just house prices that have surged ahead; cheap money has encouraged investors across the world to take bigger risks, creating several smaller bubbles. Together the huge boost to supply (from emerging economies) and the huge boost to demand (from easy money) have offset the burden of higher oil prices, creating the once-impossible combination of robust growth and modest inflation.
Don’t panic
The era of cheap money is nearing an end. For the first time in 15 years, the three big central banks are now all tightening monetary policy. The European Central Bank has already followed the Federal Reserve’s lead in raising interest rates. Only now are the markets realising that interest rates may rise by more than they had expected. In the long term, rates should be roughly equal to nominal GDP growth, but in America and elsewhere they are still well below it. Optimists argue that America’s economy is coping well with rising interest rates, but it isn’t really aware of tight money yet. Without easy credit, dear oil will cause more pain.
Until recently, financial markets appeared to be betting that the Goldilocks economy—neither too hot, nor too cold — was safe from the bears. The troubled markets are a reminder that sooner or later growth will slow or inflation will rise. Inflation is not about to spiral upwards but with diminishing spare capacity, it could gradually rise. America has an extra risk because Wall Street suspects that Ben Bernanke, the Fed’s new chairman, may be a soft touch on inflation. If that suspicion persists, he will need to raise interest rates by more than otherwise—or investors will do the tightening for him by pushing up bond yields. That would make other assets look expensive.
It is in the American housing market that the bear may growl loudest. By borrowing against the surging prices of their homes, American consumers have been able to keep on spending. The housing market is already coming off the boil. If prices merely flatten, the economy could slow sharply as consumer spending and construction are squeezed. If house prices fall as a result of higher bond yields, the American economy could even dip into recession. Less spending and more saving is just what America needs to reduce its current-account deficit, but for American households used to years of plenty it will hurt.
The confidence
For the world, it is best that America slows today. Later, imbalances will loom even larger. A few years ago, Japan and the euro-area economies were flat on their backs. Now they are growing "above trend", so the world depends less on America than it once did. The boost to the world economy from China and India will last into the future, even allowing for mishaps. Wise investors should resist the urge to flee, reduce their holdings of risky assets and stare down the bear. [br] American families are encouraged by cheap money to borrow and spend lavishly.
选项
A、Y
B、N
C、NG
答案
A
解析
根据American family定位相关内容在第三部分的第三段,说明该判断是正确的
转载请注明原文地址:https://tihaiku.com/zcyy/2884021.html
相关试题推荐
Whatkindsofpeopleareinhighdemandonthejobmarket?[br]Whichofthefol
Whatkindsofpeopleareinhighdemandonthejobmarket?[br]AccordingtoSch
Whatkindsofpeopleareinhighdemandonthejobmarket?[br]Bysaying"butt
【B1】[br]【B14】A、besidesB、despiteC、asD、toC本题考查的是词义辨析和习惯用法。As在这里的意思是“作为”,Engl
Accordingtothefirstparagraph,childrenasanInternetmarket______.[br]Ta
【B1】[br]【B11】A、InspiteB、YetC、AlthoughD、DespiteC
【S1】[br]【S5】markets由此句话可知,business与market相联系,故markets符合句意。
IsAmericalosingthebattleagainstteendrugabuse?Despiteyearsofanti-
[originaltext]Well,Imanageasmallbranchofalargesuper-market,andwe
[originaltext]Well,Imanageasmallbranchofalargesuper-market,andwe
随机试题
We______payingyouavisitbutthebadweatherpreventedusfromdoingso.A、had
InSeptember,morethanadozenwhalesbeachedthemselvesintheCanaryIsla
A、Controllingone’sanger.B、Holdingone’semotion.C、Arguingfiercely.D、Keepin
近年来,许多中国出口厂商受到了亚洲金融危机的冲击。金融危机导致亚洲消费市场严重萎缩,使得对该地区的出口十分困难。为应对这种出口低迷的局面,我们必须采取有
下列哪个是迄今为止信息系统开发中应用最普遍、最成熟的方法:A.快速原型法 B.
下列关于评标专家的说法中,正确的是()。A.评标专家的选择必须采取随机抽取方式
儿童期性心理咨询的内容包括()多选A.性别认同 B.性困扰 C.性好
既能够显示本企业员工平均收入的高低,又能作为企业向劳动力市场提供的劳动力价格信号
1年期债券面值1000元,发行价格1000元,债券票面利率3%,到期一次还本付息
对应收账款进行清查时,应采用的方法是()。A、与记账凭证核对 B、发函询证
最新回复
(
0
)