Recovery from the crisis?
---Dr.Debesh Bhowmik
The spill over effects of the US financial crisis and the Euro Area debt crisis in the world capital market were many folds in banking,money,and financial markets.The volatility in the world stock market was seen and it lasts for a long time.The crisis of liquidity is the final output.The dollar liability had increased quickly due to rising demand for dollar which turned banking failure and downgrading credit rating of USA.The Euro crisis had collapsed the Euro Area in the debt financing and banking crisis and finanally brought about the depression whose nature was double dip and spread over the Europe and America. The Hegemony of Euro dropped down along with dwindled trade volume and the value of Euro.The capital market was collapsed.The output and employment fell down considerably.The revival was not seen or forecast until the last quarter of 2013.However, the a ray of hope was found in the capital market revival especially in the stock markets.Yet , the improvement of other macro fundamentals of USA were observed earlier than in Euro Area.
After the emergence of crisis in USA, the S &P 500 has been improved greatly from 1257.6 in 2011 to 1569.19 in 2013Q1 and it stood at 1691.42 as of today , ie, a promising recovery.At the time of Euro crisis,the Eurotop of Europe rose from 2100.86 in 2011 to 2431.37 in 2013Q1.The FTSE 100 of UK stepped up from 5572.3 in 2011 to 6411.74 in 2013Q1 which is now 6583.39 on today, ie a steady rise. The Asian market has gone forward after the crisis. The Nikkei 225 of Japan was 8455.4 in 2011 which skipped to 12397.91 in 2013Q1 and today it is 13615.19 –a sharp rise. The HIS of HongKong was 18434.4 in 2011 which increased to 22299.63 in 2013Q1 but marginally fell to 21807.56 as of today. The BVSP of Brazil was 56754 in 2011 that increased to 60952 in 2012 and then decreased to56352 in 2013Q1 and lastly tends to 49874.90 on 10.8.2013 –clearly downward. After all,the revival of American and European stock market were visible having a great shock. The more notable depreciation of the external value of Euro from 0.719 per US$ in 2011 to 0.758 in 2013Q1 was welcome for boosting trade and exchange rate market for recovery. The same trend of Yen was noticed but the appreciation of Yuan which produced a great debate in the international market for rising of Chinese economy , was challenged by US in many directions. But, the world interest market is not converging each other from EuroArea,USA,Japan or China, although all are running towards falling rate , yet the differential interest rate are too high which made the stock market volatility easier than before. Irrespective of other things, the financial recovery is surely visible from the shades of the great crisis.