This comment was made by Chancellor Alistair Darling before last month's G7 meeting during which a plan aimed at easing the crisis in global credit markets was approved. The plan calls for greater financial transparency, more oversight of financial firms and an improvement in the work of credit rating agencies. Darling's view is that the G7 has to take "urgent action" to ameliorate the situation.
It's a huge economic shock, definitely, but our country and banks are far better prepared today than in the 1930s. I don't think we can call the current recession a depression quite yet.
This might be making a mountain out of a molehill. The financial system of today is very much more equipped than prior years/decades and there is goverment intervention (both domestic and foreign) to nip the crisis in the bud.
Furthermore, the credit crunch really has appeared to show the true value of financial stocks such as Bear Stearns, Citigroup and the monolines. Banks such as GS and JPM have come out nearly unscathed by this mess which really goes to show how much it is an American Big Bank Crisis rather than an economic crisis whose ripples may be felt further through the world. Understandably, non-US banks like Barclays and HSBC have weathered this storm pretty well.
To point to the cause of the ongoing recession, the credit crunch can hardly be the scapegoat. With regards to other crisises that pale in comparison to the Great Depression but were really far worse than the credit crunch, we need to look no further than the 1997 Asian Financial Crisis or the 1988 Russian debt default or the 1980s Latin American debt crisis. These give us insight into how a financial crisis can cause an economic crisis throughout the world.
It is an overeaction. While the crisis is bad, America usually has a history of accountability after a crisis (unlike some countries like Japan or in some Asian ecnomies where an extened 'cover up' would now still be taking place if the sub-prime crisis took place- I'm not trying to be offensive, just judging by history) - look at Enron, other shocks- there will be accountability then a return to slow growth in the US. Meaning, after the companies have experienced dramatically bad results (with some bankruptcies of course) new processes will be implemented. In 2009 real GDP is projected to be growth of 1.3% and in 2010 about 2.2%.
yes but the only beauty of a worldwide crisis is that it can converge networks into open sourcing one solution- goodwill surveys show the most successful network solution is that linking round microcreditsummit and as Alan Webber's article in USA Today earlier this week said Dr Yunus' new book mapping how to replicate microcredit service organisations into microhealth, microagriculture, microeducation, and every other vital service that needs to be communalised to end poverty merits a Nobel Laureate for Economics. Unless we do map a collaboration between peace and economics, my dad forecast 24 years ago that globalisation would not compound sustainability. 3 links in this 24 year journey:
Dad 24 years ago from his desk at The Economist http://www.normanmacrae.com/netfuture.html
Comments | 6 Total
May 22, 2008 at 11:13am by Saabira Chaudhuri
This comment was made by Chancellor Alistair Darling before last month's G7 meeting during which a plan aimed at easing the crisis in global credit markets was approved. The plan calls for greater financial transparency, more oversight of financial firms and an improvement in the work of credit rating agencies. Darling's view is that the G7 has to take "urgent action" to ameliorate the situation.
May 22, 2008 at 4:36pm by Rachel King
It's a huge economic shock, definitely, but our country and banks are far better prepared today than in the 1930s. I don't think we can call the current recession a depression quite yet.
May 22, 2008 at 10:51pm by Dino Mason
This situation is rough, yes, but I don't think it is as bad as the 70's recession.. That situation seemed pretty hopeless..
May 23, 2008 at 12:58am by Jo Nelgadde
This might be making a mountain out of a molehill. The financial system of today is very much more equipped than prior years/decades and there is goverment intervention (both domestic and foreign) to nip the crisis in the bud.
Furthermore, the credit crunch really has appeared to show the true value of financial stocks such as Bear Stearns, Citigroup and the monolines. Banks such as GS and JPM have come out nearly unscathed by this mess which really goes to show how much it is an American Big Bank Crisis rather than an economic crisis whose ripples may be felt further through the world. Understandably, non-US banks like Barclays and HSBC have weathered this storm pretty well.
To point to the cause of the ongoing recession, the credit crunch can hardly be the scapegoat. With regards to other crisises that pale in comparison to the Great Depression but were really far worse than the credit crunch, we need to look no further than the 1997 Asian Financial Crisis or the 1988 Russian debt default or the 1980s Latin American debt crisis. These give us insight into how a financial crisis can cause an economic crisis throughout the world.
May 23, 2008 at 2:31am by John Riley
It is an overeaction. While the crisis is bad, America usually has a history of accountability after a crisis (unlike some countries like Japan or in some Asian ecnomies where an extened 'cover up' would now still be taking place if the sub-prime crisis took place- I'm not trying to be offensive, just judging by history) - look at Enron, other shocks- there will be accountability then a return to slow growth in the US. Meaning, after the companies have experienced dramatically bad results (with some bankruptcies of course) new processes will be implemented. In 2009 real GDP is projected to be growth of 1.3% and in 2010 about 2.2%.
May 23, 2008 at 9:20am by chris macrae
yes but the only beauty of a worldwide crisis is that it can converge networks into open sourcing one solution- goodwill surveys show the most successful network solution is that linking round microcreditsummit and as Alan Webber's article in USA Today earlier this week said Dr Yunus' new book mapping how to replicate microcredit service organisations into microhealth, microagriculture, microeducation, and every other vital service that needs to be communalised to end poverty merits a Nobel Laureate for Economics. Unless we do map a collaboration between peace and economics, my dad forecast 24 years ago that globalisation would not compound sustainability. 3 links in this 24 year journey:
Dad 24 years ago from his desk at The Economist http://www.normanmacrae.com/netfuture.html
Yunus and dad at lunch with 30 other curious minds in St James on London "create world without poverty" booktour day feb 15 http://worldentrepreneur.net/_wsn/page4.html
an hour after my next bumping into Yunus in london http://www.number-10.gov.uk/output/Page15305.asp
chris macrae dc micro news bureau 301 881 1655