Global economy will soon recover

Wednesday, 04 March 2009

The global economy will turn around by the second half of the year, according to a financial expert. Jeremy Siegel, professor of finance at the Wharton School of the University of Pennsylvania and author of The Stocks for the Long Run, said financial firms buying, holding and insuring large quantities of risky, mortgage-related assets on borrowed money caused the economic downturn.Siegel is due to deliver a keynote address at the first Wharton Global Alumni Forum to be held on March 11-12 in Dubai, Professor Siegel is an expert on macroeconomics, financial markets, long-run asset returns and demographics.

"During dotcom IPOs of the early 1990s, the firms that underwrote the stock offerings did not hold on to those stocks," Siegel was quoted as saying on Knowledge@Wharton, the Wharton School's journal of business analysis."They flipped them. But in the case of mortgage-backed securities, the fin-ancial firms decided these were good assets to hold. That was their fatal flaw."

According to Siegel the US economy is not nearly as battered as it was during the early 1980s, when unemployment, inflation, and interest rates were all considerably higher than they are today. "I think by the second half of this year, things might turn around faster than people are now predicting," Siegel said.The Wharton Global Alumni Forum in Dubai organised by the Wharton School of the University of Pennsylvania, the world's first collegiate business school, is expected to attract over 300 Wharton graduates from all over the world. Wharton School Dean Thomas S. Robertson commented: "The Middle East region, like the rest of the world, is looking forward to a positive shift in the global economic climate. The Wharton Global Alumni Forum in Dubai will discuss the current challenges from a regional perspective, and try to seek answers to restore market confidence and boost entrepreneurship."

Source: GulfNews