TEXT OF INTERVIEW
Scott Jagow: Wall Street has the day off, but other stock markets are working overtime today to fill sell orders. Overseas investors seem to think there’s little chance the U.S. economy will avoid recession. In India, the main stock index was down nearly 11 percent today. Hong Kong shares lost 5.5 percent. Even Japan’s Nikkei fell almost 4 percent. In Europe, shares are down more than 2 percent to their lowest level in 18 months.
Let’s bring in our man in London, Stephen Beard. Stephen, what’s eating at investors this morning?
Stephen Beard: Well, I think markets are, in a sense, taking their cue from President Bush’s announcement on Friday. His measures designed to boost the U.S. economy have not boosted optimism in Europe, and certainly not in Asia. And in spite of the theory that has gained ground and has stabilized markets — the decoupling theory, the idea that the booming economies of China and India will keep the world economy afloat.
Jagow: Yeah, what happened to that? Where’s the global economy? Why aren’t investors taking comfort in the idea that we now have a global economy? Why are they so concerned about the U.S.?
Beard: Well, it does seem now that the investors are resorting to that old adage: When Wall Street sneezes, the rest of the world catches a cold. Clearly, the idea is sinking in that the U.S. economy is pretty fundamental. U.S. consumers account for about 40 percent of global consumption. That’s a pretty telling figure.
Jagow: Now at the same time, Stephen, the British prime minister is talking about the global economy and asking for a watch dog, is that what I understand?
Beard: Yes, Gordon Brown is actually in India, and he’s been talking about the need for a kind of global financial watch dog to warn the world about the dangers of financial contagion — the sort of problem we’ve seen emanating from the subprime crisis in the U.S. Institutions like the IMF, for example, and the World Bank, were created in a different era, in an age of what he calls sheltered nation states — before national problems could quickly turn into global problems.
Jagow: All right, Stephen Beard in London. Thank you.
Beard: OK, Scott.
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