World Markets
Pulling Out All The Stops
The turmoil in credit markets reached a crescendo in March,
with the Fed-orchestrated rescue of Bear Stearns in the USA and
shocking losses at UBS in Switzerland. Investor sentiment,
however, had become so depressed, and cash balances so high
that even a modest improvement in mood was sufficient to
trigger a powerful short-term rally. Whether it can be
sustained through the summer doldrums is open to question,
given the clear signs of global economic slowdown, and IMF
estimates of losses and write-downs from the credit crisis
totalling $945bn. Investors can take comfort from the fact that
these losses are spread across the world, rather than
concentrated in a single country, as was the case in the
Japanese crisis of the early 1990s. The leading central banks
are also coordinating their approach to the crisis.
Furthermore, private equity investors are now
