AS the repercussions of the September 11 attacks in the US start to be felt I go back to my earlier comments that we are in uncharted territory. This is now being borne out as we see the full financial impact of the attacks.
AS the repercussions of the September 11 attacks in the US start to be felt I go back to my earlier comments that we are in uncharted territory. This is now being borne out as we see the full financial impact of the attacks.
Already we have seen the Dow fall in the order of 1500 or so points. Our market also has fallen below the 3000-point mark and seems to be treading very delicately at that level. In the past few days we have seen the market come back a little in response to movements upwards in the US market. But the collateral damage was the concern that we had and that is only now starting to come through to the market.
The first major collateral damage was going to be felt in the airline and tourism industries. All of the major airline operators have announced the removal of vast numbers of jobs. Manufacturers such as Boeing have suggested numbers of around 30,000 jobs were to go.
The British tourism industry has indi- cated that it is likely to lose between 20 and 30 per cent of its custom. Suggestions are such a downturn would place that industry in serious jeopardy as well.
Now the fallout continues in other areas. Standard and Poor’s (S&P) has just indicated that it may downgrade the sovereign credit rating for Japan, citing the terrorist attacks in the US and resultant delay in the structural reforms required in Japan as the reason.
The world had awaited the launch of a government reform plan that was going to give the Japanese economy a much-needed shot in the arm. Now this event may well have been delayed as a result of the WTC attack. Prime Minister Koizumi has rejected any suggestions that the structural reforms will not go ahead as planned and on schedule.
“Revitalisation of the Japanese economy is our duty for the rest of the world,” he said.
It is true that this duty needs to be carried out. It also must be said that such a duty has needed to be carried out for about 10 years.
So far not one Japanese Prime Minister has shown that he has had either the intestinal fortitude or the ethical background to do anything about the problems that have beset that country. In most cases, Prime Ministers have been dogged by corruption and scandal of one kind or another for many years.
The upshot of a drop in ratings by S&P will have serious implications for the Japanese. It will immediately make it more expensive for them to borrow money in the international open loan market. This will put further pressure on Prime Minister Koizumi to undertake the reform the whole world knows needs to be done (and done quickly).
A vicious circle seems to be developing here. Already Moody’s has indicated it is considering similar action. It has placed Japan in a watch mode until a final decision is made. Both the actions by S&P and Moody’s did occur before the events of September 11.
However, WTC attacks certainly would not have boosted their chances of these ratings being improved. We await Koizumi’s next move with interest.
Already we have seen the Dow fall in the order of 1500 or so points. Our market also has fallen below the 3000-point mark and seems to be treading very delicately at that level. In the past few days we have seen the market come back a little in response to movements upwards in the US market. But the collateral damage was the concern that we had and that is only now starting to come through to the market.
The first major collateral damage was going to be felt in the airline and tourism industries. All of the major airline operators have announced the removal of vast numbers of jobs. Manufacturers such as Boeing have suggested numbers of around 30,000 jobs were to go.
The British tourism industry has indi- cated that it is likely to lose between 20 and 30 per cent of its custom. Suggestions are such a downturn would place that industry in serious jeopardy as well.
Now the fallout continues in other areas. Standard and Poor’s (S&P) has just indicated that it may downgrade the sovereign credit rating for Japan, citing the terrorist attacks in the US and resultant delay in the structural reforms required in Japan as the reason.
The world had awaited the launch of a government reform plan that was going to give the Japanese economy a much-needed shot in the arm. Now this event may well have been delayed as a result of the WTC attack. Prime Minister Koizumi has rejected any suggestions that the structural reforms will not go ahead as planned and on schedule.
“Revitalisation of the Japanese economy is our duty for the rest of the world,” he said.
It is true that this duty needs to be carried out. It also must be said that such a duty has needed to be carried out for about 10 years.
So far not one Japanese Prime Minister has shown that he has had either the intestinal fortitude or the ethical background to do anything about the problems that have beset that country. In most cases, Prime Ministers have been dogged by corruption and scandal of one kind or another for many years.
The upshot of a drop in ratings by S&P will have serious implications for the Japanese. It will immediately make it more expensive for them to borrow money in the international open loan market. This will put further pressure on Prime Minister Koizumi to undertake the reform the whole world knows needs to be done (and done quickly).
A vicious circle seems to be developing here. Already Moody’s has indicated it is considering similar action. It has placed Japan in a watch mode until a final decision is made. Both the actions by S&P and Moody’s did occur before the events of September 11.
However, WTC attacks certainly would not have boosted their chances of these ratings being improved. We await Koizumi’s next move with interest.
