Current Stern Issues Fussing Financial Markets

Purpose — The purpose of this paper is to evaluate the current ability and prospects of the financial economy to respond to the newest challenges of the world economy with the special orientation to the emerging markets. Design/methodology/approach — The paper revisits the crisis as it is moving from an acute to a chronic phase. Meaning no new recession is thinkable top priority today is the euro zone crisis and China change. Findings — The euro zone is afflicted by three ills: a banking crisis, a sovereign-debt crisis and a growth crisis. Dealing with one often makes the others worse. Whatever the issue it is not simplifying but aggravating the behavior of the financial markets participants, viz. institutional investors. In case of China which economic role is expanding and plummeting simultaneously the expectations are even more controversial. Research Limitations/Implications — The author’s ability to decipher what went wrong in the financial economy could not translate fully into how to fix them. It easier to point out the flaws in a system than to correct them. Practical Implications — Some additional snags protrude out of the fact that main economic players have no trust in Chinese statistics. Originality/value — The paper talks broadly about a more balanced economy and adds insight into the present and the future of international financial markets.