Peter Lyons: Resurgent US economy will bring pain for us all
The old adage, “When the United States sneezes, the rest of the world catches a cold” still applies. The United States is the largest economy in the world by a country mile. Ben Bernanke, the governor of the US Federal Reserve, recently mentioned the possibility of reducing its policy of quantitative easing. Financial markets around the world started having fits. New Zealand’s sharemarket slumped and the value of our currency fell against the US dollar.
Novice investors in Mighty River have been left puzzled about why their share price has dropped because there has been no bad news about the stock since its float. Decisions made by officials in foreign countries can quickly impact on financial markets far afield at the click of millions of computer mice.
The US economy has been in the doldrums since the global financial crisis.