Global reach of U.S. subprime slump
TEXT OF STORY
Scott Jagow: Federal Reserve Chairman Ben Bernanke and Treasury Secretary Hank Paulson are in South Africa today.
They’ll meet with other finance leaders to talk about the subprime issue and how it’s effecting economies around the world.
Gretchen Wilson reports from Johannesburg.
Gretchen Wilson: Though government policy makers know a lot about interest rates and currency valuations, with the subprime crisis they’re a lot like the rest of us — largely in the dark. Jeff Gable is head of research at ABSA Capital in Johannesburg:
Jeff Gable: This is something that the banks themselves are only beginning to understand where the losses are. This is not an issue that policy makers themselves have the most information on.
In South Africa, the reserve bank governor says the subprime turbulence “is likely to complicate the work of the G-20.” It’s already complicating emerging markets.
While South African banks aren’t directly involved in the subprime crisis, shares are falling in tandem with those of U.S. banks. Adrian Saville is with Cannon Asset Managers:
Adrian Saville: It’s a comment on people’s willingness to take risk.
He says investors are retreating from emerging markets and into developed markets.
In Johannesburg, I’m Gretchen Wilson for Marketplace.
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