Global Credit Crunch

By James McEvoy

While the local markets have for sure taken a beating as of late, the international markets have sustained a little better. Is credit really a market make or break? Most analysts are looking for a positive momentum swing before advising buy side for their preferred sectors. Meanwhile, the big momentum of the LBO game made famous by such firms as KKR and Blackstone have simmered slightly.

The global crunch however does not seem to be effecting oil and energy mid-eastern countries. Many wonder why. The answers, while seemingly complex to explain, are rather simple. Since they are both energy and oil rich, their assets right now could not be in higher demand. And while countries like UAE are being smart and re-investing their liquidity abroad into high yield returns such as retail, casinos, hotels and some mega resorts, everyone else is scrambling to try and find that next sure “boom”.

If you follow the trends of the markets over the last 100 years, there have been several crunches, some very big crunches, but usually it is just a much needed correction in the markets to keep inflation at bay, and make sure the economy stays sustainable in growth.

I believe the credit crunch will stay around just a big longer, but the overall market is due to get back on course. The USA economy is actually stronger than what is has been in a long time, but because of our current “credit” crisis, it makes it seem like panic time. I believe business will go on as usual, except more firms will look abroad and deeper into emerging markets to see what valid “plays” there are. There are many truly great opportunities both domestic and international. If the markets and investors take their time to sift through the panic, and look closely, now is a great time to get in on some fantastic opportunities, and be sitting very nice after the market is done with, the once again, normal correction.