(Read more on the debt and equitymarkets.)
NEW YORK CITY-Global financial volatility has increased as USsubprime woes have spread to the rest of the world; however, GlobalInsight's chief economist Nariman Behravesh and economist SaraJohnson say that overall, strong global fundamentals will likelylimit the downside from the recent financial crisis. Global Insightestimates that roughly 60% of the US $2-trillion debt in thenon-prime mortgage market was securitized. Of this, roughly halfwas repackaged and sold to investors outside the US mostly inEurope and Asia.
The Global Insight economists' explain that central banks havebeen quick to pump emergency liquidity into their respectivebanking systems. "More injections may be required," they say. "Ifgrowth prospects weaken considerably, many central banks willabandon any further tightening and even begin to loosenpolicy."
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