Storm Warning: US Mortgage Market Fears Sweep Globe

10 August 2007

NEW YORK: Although maintaining a low profile on the implications of the burgeoning subprime crisis, the global ad industry is fastening its seatbelts for what looks set to be an extremely bumpy economic ride. Whether long or short-term, nobody knows.

Reports Friday's Wall Street Journal: "Fallout from the intensifying credit crisis stretched from a French bank [BNP Paribas] to the largest home-mortgage lender in the US, triggering unusual central-bank interventions and driving the Dow Jones Industrial Average to its second-worst drop this year."

Blue-chip shares dove 2.8% yesterday, reflecting the concern of global markets.

Exacerbating the jitters was a SEC filing by North America's largest mortgage lender, Countrywide of Calabasas, California. It reported that it is shoring up its finances and had "adequate funding liquidity".

But the after-shock came with its warning that "the situation is rapidly evolving and the impact on the company is unknown." The WSJ comments that Countrywide's statement "could send shivers through financial markets today".

Meantime, Japan's central bank yesterday (Thursday) injected $8.39 billion into money markets, following in the footstep of the European Central Bank, which pumped more than $130bn to sustain the markets, and the US Federal Reserve, which added $24bn in reserves to the domestic banking system.

Data sourced from Wall Street Journal Online. additional content by WARC staff