The global economic bubble has burst, and it has become clear that governments can no longer continue to run massive budget deficits indefinitely, economist Marco Pietropoli says.
In an exclusive interview with Press TV, Pietropoli, an economist with RM Wealth Management, said, “The markets, in many ways, have been completely misaligned with economic fundamentals over the last couple of years.”
“The markets are finally starting to price these matters in,” he added.
US, Asian, and European stock markets suffered heavy losses on Monday, with Friday's unprecedented US credit rating downgrade adding to the financial crises.
“We were living in this bubble territory where we perceived that governments can carry on running massive budget deficits forever, and that Mr. Bernanke will keep printing money and propping up asset prices,” Pietropoli stated.
On Monday, the Dow Jones industrial average fell 634 points, or about 5.55 percent, in one of its steepest declines ever in the first full day of trading since Standard & Poor's downgraded the US credit rating on Friday.
European stocks also continued to fall as fears grow that Europe's debt crisis is spinning out of control, with Greece, Ireland, and Portugal having already received bailout packages from the European Union and Italy and Spain in danger of becoming the next victims of the crisis.
Tokyo's Nikkei stock market fell 1.4 percent before making slight gains on Monday while Australia's S&P/ASX-200 index shed almost 2 percent in early trading, and indexes in New Zealand plummeted more than 3 percent.
On Sunday, the Saudi stock market rose slightly after diving 5.46 percent earlier in the day, while other Arab stock markets all plunged.
Last week, China's top ratings agency slashed the US credit rating from A+ to A, after having downgraded the US credit rating from AAA to A+ in November.