The Straits Times
Nov 6, 2008 |
Crisis will last till 2010
By Fiona Chan
THE financial crisis will last until the middle of 2010, when housing prices in the United States are expected to bottom out, predicted currency market guru Eisuke Sakakibara on Thursday.
'The days of Wall Street and Greenspan are over,' declared Dr Sakakibara, Japan's former Vice-Minister of Finance for International Affairs and one of the world's most influential economics commentators.
He is also known as 'Mr Yen' for his ability to move the foreign exchange markets, Greenspan-like, with his pronouncements during his tenure as Financial Commissioner to Japan's Ministry of Finance.
At a luncheon talk on Thursday, Dr Sakakibara said that the world economy, which had been dominated by the financial sector and financial engineering, will swing back to focus on the 'real sectors of manufacturing and services'.
He anticipates a 'fundamental change in regulations', with more rules imposed on leveraging and risk-taking by commercial institutions.
Although the period of panic is over, temporarily perhaps, the rapid credit contraction and deleveraging that has taken place is likely to continue until 2010, he said.
With Wall Street licking its wounds, Dr Sakakibara also suggested that Asian financial centres - including Singapore - should seize this chance to grow aggressively and shine.
'With the fall of Wall Street as a major financial centre, you could develop some sort of Asian regional financial transactions, and Singapore obviously is one of the candidates to be the centre of such regional financing.'
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