ID :
199304
Fri, 08/05/2011 - 12:04
Auther :
Shortlink :
https://oananews.org//node/199304
The shortlink copeid
Gov't must quell fears of double-dip in U.S.
SEOUL, Aug. 5 (Yonhap) -- The global financial market is teetering from fears of a dreaded double-dip in U.S. economy. The Dow Jones Industrial Average dipped 4.31 percent and the Nasdaq 5.08 percent, the biggest fall since December 2008. European stock markets lost more than 3 percent.
In South Korea, the KOSPI index plunged 154 points over the last three days. Some 86 trillion won (US$80.6 billion) went up in smoke. The financial market is in a state of panic.
Despite the last-minute deal in Washington that averted default, pessimism runs amok about the U.S. economy. A major slowdown seems inevitable under the deal that only grants a higher government debt ceiling with spending cuts. It deepens the fears caused by the news that U.S. economic growth stopped at a below-expected 1.3 percent in the second quarter and that the manufacturing index in July was the lowest in two years. Massive money circulation from two rounds of quantitative easing apparently didn't bring results.
More frightening is the fact that the U.S. doesn't really have many policy options to calm rattled nerves. Financial troubles are spreading throughout Europe, and should China decide to contract its economy to control inflation, the world economy will seriously suffer.
How the U.S. economy fares is not an issue just for the U.S. A double-dip there will throw the world economy back into crisis, which is why some say Washington will eke out a recovery plan. There is already speculation that another, third round of quantitative easing is on its way.
The South Korean government doesn't believe that the U.S. will fall into a double dip. But it must stop unsubstantiated fears from shaking up the country's economy and make full efforts to pacify the rampant sense of fear. Certainly, recovery plans by Washington may have limited results and chances are high that market fears will come and go repeatedly. The government needs to monitor all movements in financial and foreign exchange markets to ward off any major shock.
In South Korea, the KOSPI index plunged 154 points over the last three days. Some 86 trillion won (US$80.6 billion) went up in smoke. The financial market is in a state of panic.
Despite the last-minute deal in Washington that averted default, pessimism runs amok about the U.S. economy. A major slowdown seems inevitable under the deal that only grants a higher government debt ceiling with spending cuts. It deepens the fears caused by the news that U.S. economic growth stopped at a below-expected 1.3 percent in the second quarter and that the manufacturing index in July was the lowest in two years. Massive money circulation from two rounds of quantitative easing apparently didn't bring results.
More frightening is the fact that the U.S. doesn't really have many policy options to calm rattled nerves. Financial troubles are spreading throughout Europe, and should China decide to contract its economy to control inflation, the world economy will seriously suffer.
How the U.S. economy fares is not an issue just for the U.S. A double-dip there will throw the world economy back into crisis, which is why some say Washington will eke out a recovery plan. There is already speculation that another, third round of quantitative easing is on its way.
The South Korean government doesn't believe that the U.S. will fall into a double dip. But it must stop unsubstantiated fears from shaking up the country's economy and make full efforts to pacify the rampant sense of fear. Certainly, recovery plans by Washington may have limited results and chances are high that market fears will come and go repeatedly. The government needs to monitor all movements in financial and foreign exchange markets to ward off any major shock.
