Global Selloff - Here We Go Again

Being the first ones to wake up, the Asian markets will be the culprit once again for starting a chain reaction in other stock markets. Many of us towards the west woke up to find out that Japan's NIKKEI lost 3%. China's stock market plummeting was last Tuesday so this marks the fifth trading day of continued selling pressure. Of course analysts said almost at once that there was no need to worry, that it was just a temporary correction. However, you wouldn't expect them to announce panic from one day to the next. Although agreed that there is no need for panic, the market can very well be indicating a coming recession in the business cycle. Remembering that the market tends to anticipate the business cycle, we should take into consideration the factors related to a recession such as changes in monetary policies. Interest rates will have to be modified not just to control inflationary prices but to either spur or at least not deter economic output.