The fate of Fannie and Freddie has been put on the back burner while Congress is busy with the passage of the financial overhaul bill since last year. However, the Obama administration has convened a housing summit this week to discuss precisely the fate of both behemoths. Both agencies have cost taxpayers $148 billion in bailouts so far, with no end in sight. They are also backstopped (unlimited) by the government until 2012.
What is certain about these agencies is that there are no easy solutions to deal with them, which certainly will cause heated debates between the government, bankers, Congress, and last but not least U.S. taxpayers. The first salvo was fired by Geithner, who said "we will not support returning Fannie and Freddie to the role they played before conservatorship, where they took market share from private competitors while enjoying the perception of government support." Furthermore, he said "we will not support a return to the system where private gains are subsidized by taxpayer losses." To me, that is the crux of the whole mess concerning these 2 agencies.
Available solutions range from full nationalization at one extreme to privatization with no government support at the other, with alternatives in between. Government guarantees may need to be provided to cover the risk of losses and structured to minimize taxpayer losses. The government would have to decide how to structure such guarantees, determine which loans would qualify for insurance, what the underwriting standards should be and how private mortgage insurance might be used. Full privatization at this point is not feasible because the agencies and FHA guarantee more than 90 percent of all mortgage loans in the country. Without their guarantee, mortgage rates will increase and cause housing demand to sap which in turn depresses home values further.
Bill Gross from Pimco argued for "full nationalization" of the mortgage finance system. He suggested that private financing is unrealistic and impractical. This is at odds with government officials who have urged for a smaller footprint in the housing market. Furthermore, Geithner reiterated the need to begin the process of weaning the markets away from government programs and make room for the private sector to get back into the business of providing mortgages. The need to keep mortgage rates reasonably priced is also important for mortgage borrowers.
The government has targeted to overhaul housing finance by January 2011. However, the voices that called for full government support will only hamper the progress to wean both Fannie and Freddie from further taxpayer bailouts. Solutions will be forthcoming from both sides, but I think a solution with structured government guarantee and private capital will probably be the way to go. A healthy market with competition would be the best way to encourage more private capital to provide mortgage solutions. At stake is the more than $10 trillion US housing market.
Wednesday, August 18, 2010
Has Bernanke embarked on a new QE2 program? What will be the impact to the economy?
Last week, Bernanke and the FOMC have predictably maintained its pledge to keep the federal funds target low for an extended period which has been the same from beginning of 2010 until now. However, there is a twist this time around. The Fed also announced that the principal payments on its mortgage-backed securities(MBS) and agency debt would be reinvested in Treasuries, with $2 trillion floor adopted for the securities portfolio. These purchases will help keep Treasury yields and mortgage costs low and prevent the level of monetary stimulus from shrinking further.
What prompted the Fed to do more quantitative easing rather than signaling an exit strategy in 2nd half of 2010? The answer: The Fed was cognizant of the fact the economy is losing momentum with latest unemployment figure hovering north of 9%. Therefore, the Fed signaled its willingness to intervene, if necessary.
On the surface, it seemed the policy action announced did not have major implications to the economy. However, the Fed is quietly laying the groundwork for further monetary stimulus and a gradual policy shift. To Bernanke, deflation risks must always be nipped in the bud before they could rear their ugly heads. Hence, his nickname "Helicopter Ben".
If the economy deteriorates further, the Fed would have no choice but to swell the balance sheet level further. The problem is the Fed purchase of Treasuries is unlikely to stimulate the economy and reduces unemployment. One critic is Anthony Crescenzi from Pimco. He argued that creation of jobs and emphasis on investments, not consumption should be the government priorities and policies. Furthermore, he harped that the government should build programs to increase the level of exports.
It would be interesting to note actions the Fed would take in the coming FOMC meetings. The million dollar question is where the economy is heading and whether further stimuli are needed to bolster the economy.
What prompted the Fed to do more quantitative easing rather than signaling an exit strategy in 2nd half of 2010? The answer: The Fed was cognizant of the fact the economy is losing momentum with latest unemployment figure hovering north of 9%. Therefore, the Fed signaled its willingness to intervene, if necessary.
On the surface, it seemed the policy action announced did not have major implications to the economy. However, the Fed is quietly laying the groundwork for further monetary stimulus and a gradual policy shift. To Bernanke, deflation risks must always be nipped in the bud before they could rear their ugly heads. Hence, his nickname "Helicopter Ben".
If the economy deteriorates further, the Fed would have no choice but to swell the balance sheet level further. The problem is the Fed purchase of Treasuries is unlikely to stimulate the economy and reduces unemployment. One critic is Anthony Crescenzi from Pimco. He argued that creation of jobs and emphasis on investments, not consumption should be the government priorities and policies. Furthermore, he harped that the government should build programs to increase the level of exports.
It would be interesting to note actions the Fed would take in the coming FOMC meetings. The million dollar question is where the economy is heading and whether further stimuli are needed to bolster the economy.
Thursday, April 29, 2010
Is Euro heading for a breakup because of Grecian bad apple?
Since the summer of 2009, we had seen a roaring recovery to the global economy. It is not just limited to the financial sector, but also to manufacturing and trade of most countries in general. Lately, the economic indicators have been pointing up, coupled with low inflation in the US. Due to high unemployment, the "Fed" has opted to keep interest rates low for "an extended" period.
If there were anything that could derail this recovery, it would be "Sovereign Defaults". Yes, since January 2010, Greece's rating has been cut, and the government is scrambling to rescue the country from going to default. In the past few days, Greece's problems have become the Euro bloc's crisis since the inception of the Euro. It has spread fast to the other PIIGS countries in Europe. Greece has been cut to junk status, while Portugal and Spain's ratings have been lowered as well this week. Interestingly, Greek bond yields are reaching unheard of levels, and CDS of the affected countries are shooting up.
It is hard to predict whether Greece will opt to stay in Euro or stick to its former currency, the "drachma". If they were to revert back to drachma, then Athens could devalue its currency to revive its economy. However, most of Greek's debt are denominated in Euro, making them expensive to payback.
Essentially, the PIIGS countries share a similar characteristic, and that is the crux of the problem here. They all have high debt-to-GDP ratios, well in excess of 70%. Also, these governments share high fiscal deficits that are not easily reduced unless massive government spendings are cut. If government deficits are cut to Euro mandated levels, Greeks will take their anger to the streets because they have been dependent on the generosity of their government for years. It is easy to spend, but much harder to tighten the belt; precisely the present situation nowadays.
Greece is not the sole focus of the contagion now since Angela Merkel, IMF and ECB are racing against time to rescue the Euro. For the very first time, the legitimacy and reputation of the "Euro" have been called into serious question. The problem should not have festered if Germany had acted decisively in resolving the problem 3 months ago. Since IMF has been courted to help resolve the problem, a lot of arm-twisting will no doubt ensue. Solutions are plenty, but not one is palatable to the Europeans.
It will be interesting to follow the saga that is coming from Europe because it has potential to infect smaller countries around the globe which share the same characteristic as Greece. A decisive and no-nonsense leadership is what the markets need to hear before the concerns become full-blown.
If there were anything that could derail this recovery, it would be "Sovereign Defaults". Yes, since January 2010, Greece's rating has been cut, and the government is scrambling to rescue the country from going to default. In the past few days, Greece's problems have become the Euro bloc's crisis since the inception of the Euro. It has spread fast to the other PIIGS countries in Europe. Greece has been cut to junk status, while Portugal and Spain's ratings have been lowered as well this week. Interestingly, Greek bond yields are reaching unheard of levels, and CDS of the affected countries are shooting up.
It is hard to predict whether Greece will opt to stay in Euro or stick to its former currency, the "drachma". If they were to revert back to drachma, then Athens could devalue its currency to revive its economy. However, most of Greek's debt are denominated in Euro, making them expensive to payback.
Essentially, the PIIGS countries share a similar characteristic, and that is the crux of the problem here. They all have high debt-to-GDP ratios, well in excess of 70%. Also, these governments share high fiscal deficits that are not easily reduced unless massive government spendings are cut. If government deficits are cut to Euro mandated levels, Greeks will take their anger to the streets because they have been dependent on the generosity of their government for years. It is easy to spend, but much harder to tighten the belt; precisely the present situation nowadays.
Greece is not the sole focus of the contagion now since Angela Merkel, IMF and ECB are racing against time to rescue the Euro. For the very first time, the legitimacy and reputation of the "Euro" have been called into serious question. The problem should not have festered if Germany had acted decisively in resolving the problem 3 months ago. Since IMF has been courted to help resolve the problem, a lot of arm-twisting will no doubt ensue. Solutions are plenty, but not one is palatable to the Europeans.
It will be interesting to follow the saga that is coming from Europe because it has potential to infect smaller countries around the globe which share the same characteristic as Greece. A decisive and no-nonsense leadership is what the markets need to hear before the concerns become full-blown.
Wednesday, January 6, 2010
The new year euphoria is still on -- but Pimco has fired the first warning salvo
Everyone is looking forward to a roaring first quarter of 2010, but a few days ago, Bill Gross of Pimco has fired the first warning salvo on US and UK debts. The markets barely registered the news as everyone is focusing on how great the first quarter results would be.
Pimco is reducing the holdings of both US and UK because their governments increased borrowings to record levels. Furthermore, Pimco is cautious on corporate bonds and mortgage-backed securities. As the economy recovers, the inflation expectations are going to be leaning on the high side. As a result, the Fed would be under the gun to perform the appropriate action, i.e. increase Fed rates. But in reality, the Fed is not inclined to do so because unemployment is still stuck in a rut. However, long-term 10-year Treasury yields have already increased to approach 4%. Outstanding U.S. public debt has climbed 58 percent to $7.175 trillion as of November from $4.537 trillion in December 2007 as the government has borrowed to fund two stimulus programs and fund record budget deficits. The U.S. budget deficit reached $1.4 trillion for fiscal 2009.
According to Bill, investors will face lower than average returns coupled with heightened government regulation and scrutiny and slower economic growth.
Pimco's money managers favor sovereign debt, corporate bonds and currencies in emerging markets. Bill also likes Germany, where the government is more fiscally conservative as it pledges to balance its budget by 2016.
This serves as a wake-up call for the US, UK and particularly Japan because 2010 would not be any easier on the government finances as in 2009. Quantitative easing and stimulus measures are only effective up to a point, and should be withdrawn appropriately after.
Pimco is reducing the holdings of both US and UK because their governments increased borrowings to record levels. Furthermore, Pimco is cautious on corporate bonds and mortgage-backed securities. As the economy recovers, the inflation expectations are going to be leaning on the high side. As a result, the Fed would be under the gun to perform the appropriate action, i.e. increase Fed rates. But in reality, the Fed is not inclined to do so because unemployment is still stuck in a rut. However, long-term 10-year Treasury yields have already increased to approach 4%. Outstanding U.S. public debt has climbed 58 percent to $7.175 trillion as of November from $4.537 trillion in December 2007 as the government has borrowed to fund two stimulus programs and fund record budget deficits. The U.S. budget deficit reached $1.4 trillion for fiscal 2009.
According to Bill, investors will face lower than average returns coupled with heightened government regulation and scrutiny and slower economic growth.
Pimco's money managers favor sovereign debt, corporate bonds and currencies in emerging markets. Bill also likes Germany, where the government is more fiscally conservative as it pledges to balance its budget by 2016.
This serves as a wake-up call for the US, UK and particularly Japan because 2010 would not be any easier on the government finances as in 2009. Quantitative easing and stimulus measures are only effective up to a point, and should be withdrawn appropriately after.
Thursday, December 31, 2009
2009 - A year of roller-coaster ride to end the first decade of 21st century
As I bid farewell to 2009, I pondered what we had went through for the past year, and there is only a word I could describe it, "harrowing". For the stock market, the S&P500 has ascended almost 70% from its March lows to end of 2009, which will tend to carry through January 2010. It was definitely a roller-coaster ride year. A lot of investors had continued to sell their holdings into the March lows, believing that the major US banks would be nationalized; but missed out on the rally that began after March, fearing that it would not last.
It seemed that the global economy is back on track, and everything is hunky-dory again ala 2007. However, I would like to remind readers that we did not enter the abyss due to the Fed and US Treasury opening their floodgates to their "widest" since the Great Depression. The financial system was being stabilized; allowing the global economy to pick up from the bottom and chug along. On the other hand, the US government introduced the stimulus spending and Cash for Clunkers programs to revive the economy and encouraging consumer spending. Coupled with the Fed quantitative easing and putting a price floor on the toxic mortgages via the Public-Private Investment program (PPIP), bank balance sheets suddenly looked healthy by mid-year. By end of 2009, we have witnessed that the major banks that received cash injections by the government last year have paid back most of the money. Of course, we all know that the real motivation for paying back the money is to escape the constraints that TARP has imposed on bank bonuses payout.
There is still a caveat here. The stock market has bounced back by anticipating a great recovery to the US and global economy, but what we see missing is UNEMPLOYMENT. US unemployment has exceeded 10% in the last report, and it looked like it is likely to remain at that level for some time to come. This does not look a strong recovery because without job creations, consumers would not have the purchasing power to spend. 2/3 of US economy is based on consumption; therefore, this is a critical factor for a sustainable recovery. Nevertheless, the stock market is moving assuming that unemployment will eventually decline. 2010 will be an important year to assess this important barometer again.
Governments worldwide have also opened their spigots to stimulate their economies. As a result, most of the stock market worldwide bounced back with vengeance. China has spent Rmb2 trillion to stimulate its economy; through purchasing commodities worldwide and for consumer and enterprise lending. What we are seeing in China is a new asset bubble brewing, and the country single-handedly propping up a lot of countries economically in 2009. What will happen next is anybody's guess, but the world is seeing a new asset bubble in epic proportions with most nations' economies tightly intertwined and integrated ever as before. The carry trade is now in US dollars for years to come. Fed has committed to keep its interest rates as low as necessary, in turn, the US dollar has weakened considerably since early 2009, and commodity prices climbing higher, especially gold which touched a high of $1200 an ounce by December 2009.,
However, the recovery is not straight forward. Our sense of complacency is shattered when Dubai shocked investors worldwide by asking for postponement of its debt payment in late November. Suddenly, emerging markets became the focus and doubt is rising whether the economy would be derailed. Things quiet down after Abu Dhabi promised to lend 10 billion dollars to Dubai. To make things worse, the witch hunt has started to track the next government which will likely default. Unfortunately, Greece is downgraded by the rating agencies. Its government needs to take steps to control its deficit in order to keep its ratings. A host of governments mostly in Europe are likely to face the music in 2010. Next up to watch: Spain. In 2009, UK and Japan's credit ratings have been questioned by investors who doubt whether they would be able to maintain their prescient ratings for long. Their debt as part of GDP is reaching new highs. Therefore, we would see the same concerns in 2010. A run to US dollars and Treasuries for safety will be imminent if this scenario would ever happen.
I am sure the job ahead for financial and government regulators worldwide would not be easy in 2010. Loud calls to exit from quantitative easing and spending programs are growing louder by the day. The economy depends very much on the spending power of consumers to drive it forward. Without consumer spending, the economic recovery would not be sustainable for long. What would drive the economy for the next few years? Green technology? Carbon trading? Battery powered cars have been a hot topic in 2009, as witnessed in BYD (China) and A123 Systems stocks. The Fed is hoping that the recovery would be gradual (Goldilocks), and not turn too strong or weak. A strong recovery would presage higher interest rates in 2010, and this might derail the recovery since the US is likely maintaining its weak dollar policy. A tough job nonetheless.... If a double-dip recession were to occur, I am sure that the Obama administration would waste no time to introduce more stimuli in the future to prop up its economy. What we need are decisive actions from the government. My fervent hope for 2010 would be a sustainable recovery in the global economy.
It seemed that the global economy is back on track, and everything is hunky-dory again ala 2007. However, I would like to remind readers that we did not enter the abyss due to the Fed and US Treasury opening their floodgates to their "widest" since the Great Depression. The financial system was being stabilized; allowing the global economy to pick up from the bottom and chug along. On the other hand, the US government introduced the stimulus spending and Cash for Clunkers programs to revive the economy and encouraging consumer spending. Coupled with the Fed quantitative easing and putting a price floor on the toxic mortgages via the Public-Private Investment program (PPIP), bank balance sheets suddenly looked healthy by mid-year. By end of 2009, we have witnessed that the major banks that received cash injections by the government last year have paid back most of the money. Of course, we all know that the real motivation for paying back the money is to escape the constraints that TARP has imposed on bank bonuses payout.
There is still a caveat here. The stock market has bounced back by anticipating a great recovery to the US and global economy, but what we see missing is UNEMPLOYMENT. US unemployment has exceeded 10% in the last report, and it looked like it is likely to remain at that level for some time to come. This does not look a strong recovery because without job creations, consumers would not have the purchasing power to spend. 2/3 of US economy is based on consumption; therefore, this is a critical factor for a sustainable recovery. Nevertheless, the stock market is moving assuming that unemployment will eventually decline. 2010 will be an important year to assess this important barometer again.
Governments worldwide have also opened their spigots to stimulate their economies. As a result, most of the stock market worldwide bounced back with vengeance. China has spent Rmb2 trillion to stimulate its economy; through purchasing commodities worldwide and for consumer and enterprise lending. What we are seeing in China is a new asset bubble brewing, and the country single-handedly propping up a lot of countries economically in 2009. What will happen next is anybody's guess, but the world is seeing a new asset bubble in epic proportions with most nations' economies tightly intertwined and integrated ever as before. The carry trade is now in US dollars for years to come. Fed has committed to keep its interest rates as low as necessary, in turn, the US dollar has weakened considerably since early 2009, and commodity prices climbing higher, especially gold which touched a high of $1200 an ounce by December 2009.,
However, the recovery is not straight forward. Our sense of complacency is shattered when Dubai shocked investors worldwide by asking for postponement of its debt payment in late November. Suddenly, emerging markets became the focus and doubt is rising whether the economy would be derailed. Things quiet down after Abu Dhabi promised to lend 10 billion dollars to Dubai. To make things worse, the witch hunt has started to track the next government which will likely default. Unfortunately, Greece is downgraded by the rating agencies. Its government needs to take steps to control its deficit in order to keep its ratings. A host of governments mostly in Europe are likely to face the music in 2010. Next up to watch: Spain. In 2009, UK and Japan's credit ratings have been questioned by investors who doubt whether they would be able to maintain their prescient ratings for long. Their debt as part of GDP is reaching new highs. Therefore, we would see the same concerns in 2010. A run to US dollars and Treasuries for safety will be imminent if this scenario would ever happen.
I am sure the job ahead for financial and government regulators worldwide would not be easy in 2010. Loud calls to exit from quantitative easing and spending programs are growing louder by the day. The economy depends very much on the spending power of consumers to drive it forward. Without consumer spending, the economic recovery would not be sustainable for long. What would drive the economy for the next few years? Green technology? Carbon trading? Battery powered cars have been a hot topic in 2009, as witnessed in BYD (China) and A123 Systems stocks. The Fed is hoping that the recovery would be gradual (Goldilocks), and not turn too strong or weak. A strong recovery would presage higher interest rates in 2010, and this might derail the recovery since the US is likely maintaining its weak dollar policy. A tough job nonetheless.... If a double-dip recession were to occur, I am sure that the Obama administration would waste no time to introduce more stimuli in the future to prop up its economy. What we need are decisive actions from the government. My fervent hope for 2010 would be a sustainable recovery in the global economy.
Thursday, November 26, 2009
Dubai - A mirage or the real deal?
Is this the start of the falling dominoes, or this is the worst to have come? Dubai World and Nakheel, both government-linked conglomerates, have asked for a standstill of six months from its creditors. Although both the Dubai and US markets are close for Eid-alAdha and Thanksgiving holidays respectively, the news have spread like virus and hammered markets worldwide. Investors are quickly having doubts on the global economic recovery since March, sending the yen high and the dollar down. Treasury yields also dropped as investors are buying bonds, and seemingly abandoning riskier assets.
Fear of a massive default and heavy losses at banks and companies worldwide holding on Dubai's debt has sent investors scurrying for exits. They doubt that the Emirate would be able to restructure their debts, which amounted close to USD80 billion. Nothing they had done publicly so far instilled any confidence to investors, therefore the shock announcement inevitably raised doubts about other countries' debts as well.
Any credibility that Dubai has built up over the years as a safe haven for investment in the Middle East, which attracted hot money going into real estate, has quickly vanished into thin air as the news broke. Investors are beginning to speculate whether the financially rich Abu Dhabi would help to bail out Dubai. If not, then Dubai has no choice but to liquidate its real estate holdings to repay.
International banks like HSBC and Standard Chartered are being questioned about their exposure to Dubai debts. It is anyone's guess which banks are affected, and to what degree the exposure is. It could seriously derail the nascent recovery to the global banking industry since March.
What happens next depend on a few things. Abu Dhabi, creditors and Dubai itself. If this issue could be contained within reasonable time and not allowed to fester, then the domino would stop at there. Otherwise, the guessing game of who is going to fail next will be raging.
Fear of a massive default and heavy losses at banks and companies worldwide holding on Dubai's debt has sent investors scurrying for exits. They doubt that the Emirate would be able to restructure their debts, which amounted close to USD80 billion. Nothing they had done publicly so far instilled any confidence to investors, therefore the shock announcement inevitably raised doubts about other countries' debts as well.
Any credibility that Dubai has built up over the years as a safe haven for investment in the Middle East, which attracted hot money going into real estate, has quickly vanished into thin air as the news broke. Investors are beginning to speculate whether the financially rich Abu Dhabi would help to bail out Dubai. If not, then Dubai has no choice but to liquidate its real estate holdings to repay.
International banks like HSBC and Standard Chartered are being questioned about their exposure to Dubai debts. It is anyone's guess which banks are affected, and to what degree the exposure is. It could seriously derail the nascent recovery to the global banking industry since March.
What happens next depend on a few things. Abu Dhabi, creditors and Dubai itself. If this issue could be contained within reasonable time and not allowed to fester, then the domino would stop at there. Otherwise, the guessing game of who is going to fail next will be raging.
Saturday, November 21, 2009
Obama whirlwind tour in Asia - G2 spirit still lives on
For the past week, President Obama has come and gone. He did a tour of a few Asian countries; drumming up trade for the US and at the same time ensuring partners that the US economy is on a stable path to recovery and deficits are under control.
Iran (non-proliferation) and climate change are also under the agenda, but less visible than the topic of world economy. Yet, G2 relations are the most watched by the world at the moment.
Before Obama arrived in China, the two administrations already came out and aired out their concerns to the press. China is complaining about low interest rates and weak dollar driving up global asset prices. China is worried about US monetary and fiscal policy might pose a threat to the global economic recovery. At the same time, US is complaining about China's yuan is massively undervalued. To the US, a low yuan gives an unfair advantage to Chinese exporters, while endangering other Asian exporters because their currencies are also rising. US argued that China should let the yuan rise which will raise household purchasing power and reduce the trade deficit. They also argued this would create world economic balance and beneficial to all.
Both sides have their point, yet no one is making a bold move. Indeed, China's central bank has hinted at renminbi rise, but it won't happen immediately. Tim Geithner is always reiterating strong dollar policy, yet no one believes him. The US is adamant on continuing with its quantitative easing policy as long as necessary to induce economic recovery and reduce unemployment. Yet China is worried about its 2.2 trillion dollars in foreign currency reserves, of which most are in US Treasury debts. A sudden spike in US fiscal deficit or US losing its AAA rating would force every investor to bail out of dollars and shift into gold, causing massive investment losses worldwide.
Yet, the status quo still remains. Essentially, a "wait-and-see" attitude is maintained, even though both sides will complain each other from time to time. As a result of the US crisis, the economy must be allowed to heal first before the next course of action could materialize.
Iran (non-proliferation) and climate change are also under the agenda, but less visible than the topic of world economy. Yet, G2 relations are the most watched by the world at the moment.
Before Obama arrived in China, the two administrations already came out and aired out their concerns to the press. China is complaining about low interest rates and weak dollar driving up global asset prices. China is worried about US monetary and fiscal policy might pose a threat to the global economic recovery. At the same time, US is complaining about China's yuan is massively undervalued. To the US, a low yuan gives an unfair advantage to Chinese exporters, while endangering other Asian exporters because their currencies are also rising. US argued that China should let the yuan rise which will raise household purchasing power and reduce the trade deficit. They also argued this would create world economic balance and beneficial to all.
Both sides have their point, yet no one is making a bold move. Indeed, China's central bank has hinted at renminbi rise, but it won't happen immediately. Tim Geithner is always reiterating strong dollar policy, yet no one believes him. The US is adamant on continuing with its quantitative easing policy as long as necessary to induce economic recovery and reduce unemployment. Yet China is worried about its 2.2 trillion dollars in foreign currency reserves, of which most are in US Treasury debts. A sudden spike in US fiscal deficit or US losing its AAA rating would force every investor to bail out of dollars and shift into gold, causing massive investment losses worldwide.
Yet, the status quo still remains. Essentially, a "wait-and-see" attitude is maintained, even though both sides will complain each other from time to time. As a result of the US crisis, the economy must be allowed to heal first before the next course of action could materialize.
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