Credit Crisis Affects Entire World

Economists in England are warning that the credit crunch we’re experiencing in the United States is making financial markets around the world vulnerable. You’ve heard the expression “when America sneezes the world catches a cold”? Well the folks at the Bank of England agree with you.

Experts are saying they don’t feel international financial markets are going to be free from worry until the credit situation in the US sorts itself out. Of particular concern is the continued loss of equity in hard assets, such as real estate. That’s a fancy way of saying when the credit market is super tight and demand for property is down, things like your home are going to lose value on paper.

Here’s what I don’t understand – it makes more sense to me that if the equities market is tough in the US the international market would be more desirable to investors. If you can’t make the return on investment you’re looking for in the USA, you take your investing dollars overseas right? I guess not.

Obviously I’ve got more research to do because my views are out of line with what the guys with PhD’s are saying. I’m going to do some more reading about it and get back to you.

Source: bloomberg.com