Seismic shock for fractured global economy following Japan earthquake

March 14, 2011

UNTIL the Japanese earthquake rocked the world on Friday, the two biggest threats to the global economy were a potential oil supply shock triggered by the political turmoil in the Middle East and the worsening debt crisis in the eurozone.

Even before the earthquake, some announcements were made by legendary investors that gave cause for alarm. This included the decision by Bill Gross, of Pimco, to sell all his US Treasury bonds and the decision by billionaire hedge fund manager Carl Icahn to give his investors' money back. In a letter sent to clients and released in a regulatory filing, Icahn said: "While we are not forecasting another market dislocation," he said. "This possibility cannot be dismissed. Given the rapid market run-up over the past two years and our ongoing concerns about the economic outlook, and recent political tensions in the Middle East, I do not wish to be responsible to limited partners through another possible market crisis."

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