The University of Iowa
The University of Iowa News Services Home News Releases UI in the News Subscribe to UI News Contact Us


100 Old Public Library
Iowa City IA 52242
(319) 384-0007; fax (319) 384-0024

Release: Immediate



UI sources on stock market turmoil

The following University of Iowa experts are available to talk about issues involving current turmoil in United States stock markets:

Enrique Carrasco, professor of law and an expert on global capital markets and currency crises. Carrasco can be reached at (319) 335-9059.

Current currency crises in Southeast Asia that have helped trigger record

sell-offs in United States markets have parallels to the situation in Mexico in the early 1990s. As in Mexico with the peso, monetary officials in Southeast Asian countries have fixed an exchange rate between their currencies and the U.S. dollar.

If traders think the local currency is overvalued, they attack the currency by selling it, causing a crisis, Carrasco says.

"In such a situation, it comes down to a war between the central bank and speculators," Carrasco says. "And the speculators usually will win."

Carrasco is the co-author of the recent article, "Encouraging Relational Investment and Controlling Portfolio Investment in Developing Countries in the Aftermath of the Mexican Financial Crisis."

William Albrecht, professor of economics and former commissioner on the Commodities Futures Trading Commission. Albrecht can be reached at (319) 335-3125.

Economic weakness in Southeast Asia is contributing to recent drops in United States stock markets, but the effects are more psychological for traders than financial for companies, Albrecht says.

"There are fundamental weaknesses in Southeast Asian economies, and that has some impact on the earnings of U.S. companies, but not a lot," Albrecht says. "Relatively speaking, U.S. companies don't export a lot to the countries that have the most weakness.

"People have been nervous about the state of the U.S. markets for some time. Once you see markets over there take a big tumble, it reinforces the nervousness among traders on Wall Street," he says.

Albrecht is an organizer of a conference at the UI Friday, Oct. 31 on the economic and financial connections between the United States and Latin America.

Tim Loughran, assistant professor of finance and an expert on stock market trading. He can be reached at (319) 335-0882.

"Monday's drop is most likely a correction," Loughran says. "A lot depends on trading over the next few days, but it might recover."