Financial Market Issues To Continue in Coming Months
- Jun 02, 2008
Abu Dhabi–During a four-day trip to the Persian Gulf, U.S. Treasury Secretary Henry Paulson said that the current financial market trouble will last for months, Bloomberg reported Monday.”We’re talking about months, and there will continue to be bumps in the road,” Paulson said, in response to a question about what the U.S. was doing to combat the dollar’s current weakness.Speaking in Abu Dhabi, Paulson also said that his faith in the dollar remained strong.”Markets respond to economic fundamentals,” he said. “Every economy is going to have its ups and downs, and the U.S. is going through a tough period. I believe the long-term economic fundamentals will be reflected in our currency.”Paulson said he expects the U.S. economy to grow more quickly in the second half as the economy handles “a trio of headwinds” that includes financial market issues, high oil prices and the housing market’s decline. Due to the subprime mortgage market collapse–which caused more than $386 billion in asset writedowns and credit losses on a global level–U.S. financial institutions have had to raise billions of dollars in capital; some turned to the Middle East for help, Bloomberg said.Citigroup received $7.5 billion from Abu Dhabi’s fund in November; Gulf funds have also given money to Morgan Stanley and Merrill Lynch & Co.