Dominoes

The stock market crash in Wall Street reverberated all over the world, amid increasing fears of a US recession. The thing with the US is that the markets are highly-developed, meaning most of the big firms are traded in the equities market. In other words, it is a barometer, an accurate one of how the entire economy is doing.

The main concern now is if this will extend beyond the credit markets, and somehow affect capital flows to other sectors of the economy, thus restricting expansion plans as well as putting a lid on consumption spending. That would indeed be worrisome.

In addition, with the capital infusion of the sovereign funds of the Gulf States, China and Singapore to the ailing banks, it means Asia is now a major source of capital, not just the recipient. And liquidity in Asia may be the key in pulling the US out of the rut it is in.