Stock markets will likely be under pressure this week with weakness in the financial sector on deepening pessimism about the global economy and worries about the possible nationalization of banks in the United States.
The idea of nationalizing some of the hardest hit U.S. banks to deal with the huge amounts of toxic assets they hold is not a popular idea with investors “because nationalization takes us down a road we don’t want to go down in terms of, first of all, moral hazard,” said Andrew Pyle, investment adviser at Scotia McLeod in Peterborough, Ont. “Once you start nationalizing some banks, you are now making it an unlevel playing field.”
