World economies send out ripples….
Japan’s woes are nothing new, it is just that they are deep seated and there are no short-term solutions. SE Asia’s economic woes have been well documented and the asset price deflation that has occurred there also ensures that they will take some time to work through the system.
Russia’s economy has been in danger for some time, and the transition to a free market system, especially under the unsteady hand of Boris Yeltsin is unlikely to hasten the cure.
All these are having a ripple effect, and now there are concerns regarding South America, and for that matter, any economy suffering from high deficits or overseas debt.
Federal Reserve Chairman Alan Greenspan has indicated that the US economy cannot fail to be influenced to some degree by the overall World situation, and that a slowdown in growth and economic activity is a distinct possibility, which in turn will continue the spiral……
This throws up the possibility of an easing of interest rates in the US, and therefore the potential for a similar move in Australia. At worst – or should that be best? – we are unlikely to see rates rise, with bond yields tumbling providing the best indication of the market’s short term direction.