Skip to content

US and European economies to still get worse

According to several political leaders around the world and senior bankers, there is still trouble brewing and European investors need to take heed. The US real estate market has fallen, but so has European banks with record losses. Most investors are not confident that the US emergency stimulus measures will keep the country out of recession, which could trigger a worldwide recession as well.

At the World Economic Forum, which is an annual meeting this year held in Davos, Merrill Lynch CEO John Thain said, "It will be a while before you see a return of normalcy in banking and (capital) markets", as reported in Reuters.

In addition, he said, "There is no need for excessive pessimism. At the same time however, we should respond quickly and should implement necessary measures."

He was not alone in these remarks, as Japanese Prime Minister, Yasuo Fukuda made similar comments. In the Prime Minister's statements, he referred to the US subprime issues and the rise, record cost of oil to be problematic indications of a growing downside in the world's economy.

As reported by Reuters, World Bank President Robert Zoellick also took note at the conference about concerns with the world's economy. He said, "Some firms are going to have some big losses (and) I don't think this has fully run its course."

Related