Stocks fell in many international markets today -- with Asian markets particularly hard-hit. Anchor Lisa Mullins finds out what's fueling the crisis in Asia from Robert Flint, news editor with Dow-Jones Newswires in New York.
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LISA MULLINS: I'm Lisa Mullins, and this is The World, a co-production of the BBC World Service, PRI, and WGBH in Boston. Stock markets around the world got the “Stormy Monday Blues†today. The Dow Jones is down 62 points at this hour at 6565. Most European markets also fell today, but it is Asia where investors are really feeling the blues. The markets in Japan and Hong Kong continue to slide today, and the Asian development bank said today that the financial crisis has wiped 50 trillion dollars off the value of assets worldwide, and that developing countries in Asia have been especially hit. Robert Flint is a news editor with Dow Jones news wires in New York. He says stocks fell further today in Asia because of the sense of gloom everywhere.
FLINT: There were some Asia-specific things. People didn't quite get the signals from China that they'd like. There were some bad news out in Japan in terms of its economy, various things like that happening but they're all kind of related. It's an overhanging sense of anxiety – not just worries but anxiety now that's pushing markets down. People just don't get any good news anymore. All the news that seems to come out is bad.
MULLINS: There is an estimate from the Asian Development Bank as we mentioned, $50 trillion dollars lost in global financial assets worldwide last year, which is incredibly shocking, but the report says that Asian economies were hit the hardest. They've been hit harder than the United States has, which I think many people find surprising. Why is that the case?
FLINT: It has largely to do with the collapse in trade. Also, many of those markets have expanded recently so they have a bigger distance to fall, you can say, relatively speaking. And when there's a slowdown in the developed and the industrialized economies, it means they're going to be buying less of the products which these developing Asian nations produce, and therefore they get hit relatively harder.
MULLINS: And Warren Buffet today, talking about the globalization of this problem told CNBC today that the US economy has “fallen off a cliff.†I mean, it would seem to the lay observer at least that the rest of the world could follow off the same cliff, but is that really accurate, though? I mean, how many analysts agree that this is likely to be a worldwide multi-year recession?
FLINT: Well, I think there's pretty broad based belief that it's going to be worldwide. The World Bank said Sunday that it's the first time that the world economy will go in contraction since the end of World War II. It's probably going to be the biggest drop in world trade since the Great Depression, and I'm speaking about the year of 2009. So there's a very wide belief through all markets, through all classes, that these are pretty rough times – probably the roughest times a lot of people have seen in their lifetime.
MULLINS: And the duration?
FLINT: That's much harder. If I could pick that, wow. That's much harder to say. A lot of people are talking about there could be spots of light towards the end of this year or next year there could be some rebound in markets, but definitely the rebound has to come. There has to be a light at the end of the tunnel but we haven't seen it yet.
MULLINS: Well, just so you don't leave us totally in the cellar, Robert, is there any kind of bright spot that you're looking at right now? Anything that would somehow contravene the gloom?
FLINT: No. I'd be hard-pressed to name one. When you look at regions or countries, it's not a case of one looking a whole lot better than the other. It's more a case of which is the least ugly horse in the glue factory. But possibly, possibly because it started first in the US and the US is usually ahead of things, leads the cycle, that the US could emerge faster than the others. But people still aren't sure about the extent of the whole crisis.
MULLINS: Well, there was a little bit of good news, I guess if you can morph it in that direction. Some major economies such as China have not moved into negative growth yet anyway. Their economies aren't growing as fast as they were but they are still growing. Why hasn't that not produced a bigger response in the markets?
FLINT: Well, China is a very special case of course, because it's trying to transform its economy and there's a lot of problems related to that. One of the things is that China has to keep a very high rate of growth in order to absorb all its labor force. And even growth figures that would be enormous in other countries aren't enough for China because it has to provide all these new jobs to avoid the really biggest fear that the Chinese have – that's social unrest.
MULLINS: All right. Robert Flint, thank you very much.
FLINT: Thank you.
MULLINS: Robert Flint is a former China Bureau Chief for Dow Jones news wires. He's now a news editor for the company in New York.
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