Asian Crisis Affects Latin American Markets
Latin American stocks fell for a second day on Friday in reaction to Asia’s currency and stock market crash. There were fears that the Asian crisis could influence investors in other emerging markets.
Argentina and Mexico (1)............... the highest falls, with their indexes down by 4 % by the (2)………….. of trading on Friday. Brazil’s BOVESPA index, which on the same day (3)………….. by far the steepest plunge in the Americas, was down 2.9 %.
“What’s happening in Hong Kong has been a terrible (4)………….. to the system,” said Richard Watt, who (5)………….. 3.5 billion dollars in emerging market investments. Investors in Brazil were concerned that its economic problems were dangerously (6)…………… to those that have caused the currency and market plunges in Thailand, Malaysia and other Asian (7)…… .
“Brazil’s economy is far from (8)………….. ,” said Ian Campbell, chief economist at Amro Bank (Amsterdam). “Its current account and fiscal (9)…………. are large and its currency is overvalued.” “ There’s no (10)…………. in trying to catch a falling knife,” said Jane Heap, Latin American stock strategist at Deutsche Morgan Grenfell. “There’s no room for (11)………….. in Brazil until the US and Asia get back to normal.”
There were also concerns that foreign investors who specialize in emerging markets could be (12)………… to sell their shares in Latin America to (13)…………. their Asian losses.
“There’s a lot of nervousness about whether investors will (14)………… their money out of stocks, because of instability in Asia,” said German Guerrero, chief trader at the Chilean brokerage Celfin SA.
Chilean markets were down only (15)…………… in afternoon trading. The Chile selective stock index fell 0.72 % and the Chile general stock index was down 0.64 %.
| A | sent | B | experienced | C | took | D | enjoyed | |
| A | stop | B | cancellation | C | close | D | collapse | |
| A | urged | B | delivered | C | recovered | D | suffered | |
| A | shock | B | reaction | C | block | D | attack | |
| A | directs | B | earns | C | deals | D | manages | |
| A | identical | B | similar | C | equal | D | related | |
| A | capitals | B | investments | C | markets | D | indexes | |
| A | sound | B | high | C | true | D | hope | |
| A | debts | B | deficits | C | shortages | D | dues | |
| A | idea | B | help | C | price | D | point | |
| A | cure | B | renewal | C | aid | D | improvement | |
| A | promised | B | reminded | C | offered | D | forced | |
| A | fill | B | pay | C | cover | D | replace | |
| A | sell | B | pull | C | put | D | rub | |
| A | slightly | B | really | C | fairly | D | badly |
| пережили значительное падение | |
| закрытие торгов (на фондовой бирже) | |
| испытали самое резкое до сих пор падение | |
| ужасный удар для… | |
| управлять инвестициями в объеме……….долларов | |
| сходны, аналогичны … | |
| в столицах… | |
| далека от устойчивого состояния | |
| дефицит по текущим счетам и по бюджету | |
| нет смысла пытаться… | |
| нет возможности для оздоровления ситуации | |
| …будут вынуждены… | |
| восполнить потери на азиатских фондовых рынках | |
| прекратят инвестирование средств в акции… | |
| индексы курсов акций слегка понизились |
INDEPENDENT READING
Read texts 1 and 2 carefully, identify key points. Express your vision of the problems in English or in Russian when tested on your progress in independent reading
TEXT 1
Nouriel Roubini: The Economist Who Foresaw the Global Financial Crisis
Introduction
Nouriel Roubini, a professor of economics at New York University, is now a global celebrity who dines with heads of states and central bank governors across the world. Just some years back he was an obscure academic known to nobody outside his field. The reason for his overnight rise to fame is one thing – he predicted the financial crisis that gripped the whole world in 2008/2009 and still continues now.
It was in 2006, speaking to an audience of economists at the International Monetary Fund, he predicted that the U.S. housing bubble would burst and the resulting events would affect the very fabric of the U.S. financial system. He went on to predict homeowners defaulting mortgages and the global financial system shuddering to a halt. But no one including the economists who listened to him in that meeting took his warning seriously. The reason was understandable, at that time most of the economies in the world and particularly the U.S. were in a good condition. The media labeled him as Dr.Doom for his deeply pessimistic views.
But from 2007, things changed fundamentally. The events that Roubini had predicted rapidly began to unfold. Mass default of mortgages started in the U.S., the institutions that held mortgages collapsed, big insurance companies and banks were in trouble, mass lay-offs became day-to-day happenings, and eventually the U.S. entered into a recession in 2008.
And this changed everything for Roubini too. Now, the media and others who saw Roubini as a “madman 2006” began to see him like aprophet. He became the most sought after adviser to all economic policy makers across the world.
Roubini was born in 1959 in Turkey to Iranian Jewish parents. During his childhood his family moved to Iran and later to Israel. After studying one year at Hebrew university in Jerusalem, he moved to Italy and attended his college there. He moved to America to pursue his doctorate in international economics at Harvard University. Because of this experience of living in many different countries and cultures he himself calls him a "global nomad."True to this name, Roubini can speak Persian, Italian and Hebrew.
After receiving Ph.D. from Harvard in 1988, he joined the economic department of Yale University. During 90's, he was involved in both academic and policy matters by doing consulting work in IMF, World Bank and the U.S. Federal Reserve, along with teaching at Yale. Currently, he is a professor at Stern School of Business at New York University and also the chairman of Roubini Global Economics or RGE, an economics consulting firm founded by him.
Roubini's approach to economics is different from traditional economists who are more interested to explain things through complex mathematical equations. He employs subjective ideas and rules which also help him to reach the nonacademic audience. Some puritan economists see this as a drawback. But he is also adept in mathematical modeling and uses his more than 20 years of accumulated experience with those models to explain economic scenarios in plain English. In the words of Jeffrey Sachs, Roubini's mentor at Harward, "he has unusual talent with both mathematics and intuitive understanding of economic institutions."
While living in a world that is witnessing the after effects of the financial crisis he predicted, he still believes that the complete recovery from the global recession will take time and this will only happen from the year 2011. According to him, America's problems were basically due to overconsumption and lack of savings and the financial crisis will eventually change the power equations in the world.
He is now actively involved with policy makers across the world to make them recognize the weaknesses of the systems they regulate. He is also a regular at finance related TV shows and interviews. In addition, he finds time to advise the clients on economic matters.
Some critics of him say that if the economy recovers faster than he predicts he could go down as nothing more than a one-hit wonder.Whatever it is in store for the future, the bachelor economist is sure to be enjoying his new-found stardom when he is discussing policy matters with some of the world's powerful people and when he is partying withyoung, beautiful admirers in his posh Manhattan apartment.
Adapted Source: http://EzineArticles.com
VOCABULARY NOTES
| housing bubble | «дутaя», как «мыльный пузырь», ситуация в жилищной сфере |
| the fabric of the U.S. financial system | структура финансовой системы США |
| defaulting mortgages | невыполненные обязательства по ипотеке |
| … shuddering to a halt | зд. …задрожав от неустойчивости перед полной остановкой в своем функционировании |
| …labeled him as Dr. Doom | закрепили за ним прозвище «доктор –предсказатель гибели» |
| lay-offs | увольнения |
| …to pursue his doctorate | заняться работой над докторской диссертацией |
| a "global nomad” | зд. «любитель странствовать по миру» |
| Yale (University) | is a private university, one of the most prestigious in the USA, founded in 1701. |
| puritan economists | экономисты, придерживающиеся строго научных взглядов |
| power equations | баланс могущества |
| a regular at finance | постоянный советник по финансовым вопросам |
| a one-hit wonder | зд. чудо одного точного прогноза |
| partying with … | «тусоваться» с … |
TEXT 2
The 2008–2009 Financial Crisis – Causes and Effects
Introduction
The 2008–2009 financial crisis is still affecting millions of Americans and is one of the hottest topics in the Presidential campaigns. Several major financial institutions have been absorbed by other financial institutions or received government bailouts since the beginning of the crisis. Some of them have crashed after the crisis. What caused the financial crisis of 2008? This is actually the perfect storm which has been brewing for years now and finally reached its breaking point. Let’s look at it step by step.
Market instability
The recent market instability was caused by many factors, chief among them a dramatic change in the ability to create new lines of credit, which dried up the flow of money and slowed new economic growth and the buying and selling of assets. This hurt individuals, businesses, and financial institutions hard, and many financial institutions were left holding mortgage backed assets that had dropped precipitously in value and weren’t bringing in the amount of money needed to pay for the loans. This dried up their reserve cash and restricted their credit and ability to make new loans.
There were other factors as well, including the cheap credit which made it too easy for people to buy houses or make other investments based on pure speculation. Cheap credit created more money in the system and people wanted to spend that money. Unfortunately, people wanted to buy the same thing, which increased demand and caused inflation. Privateequity firms leveraged billions of dollars of debt to purchase companies and created hundreds of billions of dollars in wealth by simply shuffling paper, but not creating anything of value. In more recent months speculation on oil prices and higher unemployment further increased inflation.
2. How did it get so bad?
The American economy is built on credit. Credit is a great tool when used wisely. For instance, credit can be used to start or expand a business, which can create jobs. It can also be used to purchase large ticket items such as houses or cars. Again, more jobs are created and people’s needs are satisfied. But in the last decade, credit went unchecked in our country, and it got out of control.
Mortgage brokers, acting only as middle men, determined who got loans, then passed on the responsibility for those loans on to others in the form of mortgage backed assets (after taking a fee for themselves originating the loan). Exotic and risky mortgages became commonplace and the brokers who approved these loans absolved themselves of responsibility by packaging these bad mortgages with other mortgages and reselling them as “investments.”
Thousands of people took out loans larger than they could afford in the hopes that they could either flip the house for profit or refinance later at a lower rate and with more equity in their home – which they would then leverage to purchase another “investment” house.
A lot of people got rich quickly and people wanted more. Before long, all you needed to buy a house was a pulse and your word that you could afford the mortgage. Brokers had no reason not to sell you a home. They made a cut on the sale, then packaged the mortgage with a group of other mortgages and erased all personal responsibility of the loan. But many of these mortgage backed assets were ticking time bombs. And they just went off.