I saw on the news that stock markets are crashing all over the world because of the mortgage crisis here in America (I pay my bills, don't blame me!).
I have to admit that I have no idea how all of this works. Why did the stock market in Sydney crash because we don't pay our bills here in the US?
I understand this is a broad question and I appreciate any answer.
Thanks.
Anonymous
Favorite Answer
I like Antony's answer. "something more sensitive than women..." An excellent analogy. Markets right now are panic stricken. There are said to be only two sentiments that affect stock markets--fear and greed. At the moment fear is in the ascendancy. The fear is that the U S economy is going to crumble and take the rest of the world with it. This fear is not without some basis of fact. It in fact could happen. In such an instance it is better to be sitting on cash rather than on a bunch of stock certificates.
Jason Alexanders
The market is a global economy, thus each market is able to affect another market; the Chinese 10% correction last February resulted in a 3% decline in the US.
People like to put blame on the US market because they have no other reason to suggest why we should be selling at a 10-12% discount. Remember we were at this price level in September of 2006 thus the market is 14% cheaper today than it was 16 months ago.
Antony B
Now we know there is something more sensitive than women... jokes apart stock market under standard conditions is mostly driven by sentiments. And these days information reaches so fast, it touches everybodys mood instantly and affects. Simple if you have money will spend it. But if you get news that your company is gonna bought out and employees can be driven out u won't like to spend at all. So many factors can drive sentiment. And information is affecting the stock markets all over the world at the same time since everybody is doing business with everyone.
Anonymous
America is the largest economy in the world. Other countries( like Japan for example) sell goods to America. If Americas economy slows down or goes into recession imports from the rest of the world will slow down. Everything knocks on from there, think about it.
Pembasmi Nyamuk
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