World markets down as Germany hits recession

Last Thursday, European markets opened lower following some earlier sell-off across Asia, while the biggest economy of Europe, the German economy has slipped into a recession. Shares in Paris, Frankfurt and London all went slightly down with 0.5 to 1.5 percent in early morning trading. But earlier on the day, Germany’s Federal Statistical Office said that the economic output has lowered with 0.5 percent in the third quarter compared with previous quarter. This was due to a 0.4 percent decline in gross domestic product earlier this year.
The prospects in the UK were also very pessimistic, because telecoms giant BT announced 10,000 layoffs. This news came as the unemployment rate in the UK reached an 11-year record high of 1.82 million.

Also Asian stocks slipped deeper, when investors became more and more convinced that a long recession is on the way. Hugh Johnson, chief strategist at Thomas Lloyd Global Asset Management in New York, says that the main concern of the investors is that the recession will be longer and more severe than expected. Japan’s Nikkei finished the day 5.3 percent lower while the KOSPI index in Seoul has lost 3.2 percent and the Hang Seng index in Hong Kong slipped 6 percent. Australian stocks also went down, as the All Ordinaries finished down 5.4 percent.
Another sign, that shows us the global recession is starting to take hold is that China announced that its powerhouse manufacturing sector has slowed down in October. The industrial output of China grew with only 8.2 percent, when compared with year-ago levels, a decline of 3.2 percent.

Elsewhere, a Kuwaiti Administrative Court ordered a temporary closure of the country’s plummeting stock exchange. This ruling went into effect due to a lawsuit filed by two stock brokers, who were concerned about the steep falls in the Kuwait Stock Exchange.
Before the sell-off across the Asia and Pacific region, Wall Street already knew three straight down days. The Dow Jones lost 7percent and that was the lowest close since October 27. There was also bad news for de Tech stock. NASDAQ fell more than 5 percent, to its lowest level since 2003 and the Standard & Poor’s 500 index fell 5.2 percent. Todd Morgan, senior managing director of Bel Air Investment Advisors, says that this is a culmination of continuing bad economic news and a lack of confidence and fear is disturbing the market. There is also no immediate improvement expected.

It seems to me that it really doesn’t look good for our global economy now the recession has started in Germany. Germany has the biggest economy of Europe, and the fact that a recession has started there shows that it won’t be long before other countries will be suffering from a recession. I think that after all the actions that the different governments have taken, it will be hard to find a solution. All we read in the news today is a string of bad economic news from all over the world.
At first the Asian economy was staying out of the line of fire, but now we see that the problems have started there as well, with a lot of losses on the stock market. I don’t have a good eye in this situation because the economy has always been very protected by the Asian government, and it was a real strong economy. But it seems that it is an inevitable situation.
The question I ask myself is what the governments can do to restore the economy and whether they still have the means to do this. They have taken a lot of actions to help the financial sector, and they have spent a lot of money in these rescue plans, so I hope they are still able to help the real economy now that a recession seems unavoidable.

Source: CNN: World markets down as Germany hits recession
http://edition.cnn.com/2008/BUSINESS/11/12/markets.thurs/index.html