[ti:Debt, Recession Worries Bring Volatility to World Markets] [ar:Mario Ritter] [al:Economics Report] [by:www.51voa.com] [00:00.00]This is the VOA Special English [00:02.97]Economics Report. [00:05.12]A "rollercoaster ride" [00:07.52]is one description [00:09.29]for these days of scary ups [00:11.53]and downs in financial markets. [00:14.92]If you want to use [00:16.46]a more technical term, [00:17.66]the markets are showing volatility. [00:20.60]Thursday was another example [00:23.09]of a day of strong gains [00:25.27]on the New York Stock Exchange [00:27.67]after a day of heavy losses. [00:30.20]Major measures of United States [00:33.55]markets have closed [00:35.24]with their biggest one-day losses [00:37.53]since the financial crisis [00:39.87]of two thousand eight. [00:41.76]Asia and Europe have also [00:44.60]had sharp declines. [00:46.39]Volatile markets [00:49.09]can react suddenly [00:50.73]in wild and unpredictable ways. [00:54.36]Usually some kind of shock, [00:57.41]or more than one, is involved. [01:00.35]For example, last Friday, [01:03.69]one of the three major [01:05.38]credit rating agencies [01:06.93]downgraded long-term [01:09.27]United States government debt. [01:11.51]Standard & Poor's lowered its opinion [01:15.19]of Treasury securities one step [01:17.95]from the highest rating, [01:19.89]triple-A, to AA-plus. [01:23.35]But shocks like a hopeful jobs report [01:27.09]or good earnings results [01:29.03]can stop a fall and send prices higher. [01:32.81]The United States held S&P's [01:36.89]top rating for seventy years [01:38.94]and never had a downgrade. [01:41.43]But many investors were expecting [01:44.52]that to happen even after [01:46.37]the budget deal in Washington. [01:48.71]Congress last week agreed [01:52.45]to increase the government's [01:54.10]borrowing limit in return [01:56.04]for steps to cut spending [01:58.03]and reduce the deficit. [02:00.78]S&P says it thinks America's debt [02:04.46]will only increase in the future. [02:06.69]President Obama disagreed. [02:10.18]BARACK OBAMA: "It does mean [02:11.26]we don't have a problem. [02:12.31]The fact is, [02:14.15]we didn't need a rating agency [02:15.59]to tell us that we need a balanced, [02:17.43]long-term approach to deficit reduction. [02:20.47]That was true last week, [02:22.41]that was true last year, [02:24.50]that was true the day I took office." [02:27.49]He said this week that markets [02:29.79]still consider United States credit [02:32.69]"as among the world's safest." [02:35.09]Still, there are growing worries [02:37.96]of another recession -- a double dip. [02:41.29]On Tuesday, policy makers [02:43.88]at the central bank said economic growth [02:47.01]so far this year has been [02:49.40]"considerably slower" [02:50.85]than they had expected. [02:52.89]The Federal Reserve said [02:55.32]it would likely keep [02:56.87]short-term interest rates near zero [02:59.80]for at least two more years. [03:02.49]Borrowing costs for the United States [03:05.43]remain very low. [03:07.57]But debt worries in two of Europe's [03:10.40]biggest economies have increased costs [03:13.79]for their governments in recent weeks. [03:16.67]On Monday the European Central Bank [03:20.80]began buying debt securities [03:22.55]from Spain and Italy. [03:25.00]These efforts have helped push down [03:27.83]interest rates for those countries. [03:30.32]Nick Parsons, an economist [03:33.49]with the National Australia Bank, says [03:36.79]the bank made the right move. [03:38.68]NICK PARSONS: "It has been an absolutely [03:39.97]critical decision." [03:41.27]But he also thinks the bank [03:43.41]will have to buy more. [03:44.80]And Europe must still deal [03:46.99]with the rescues of Greece, [03:49.23]Ireland and Portugal. [03:52.02]And that's the VOA Special English [03:54.66]Economics Report. [03:56.30]I'm Mario Ritter.