Will we all suffer economic pain?
Monday’s New York Times (http://www.nytimes.com/2008/10/07/business/worldbusiness/07global.html) led with the gloomy assessment that three days after US approval of a $700 billion bailout plan, “it looks like a pebble tossed into a churning sea.”
Several days of world market plunges later, a consensus is emerging that Wall Street’s pain is spreading far and wide. Pierre-Antoine Delhommais at LeMonde (http://www.lemonde.fr/la-crise-financiere/article/2008/10/08/la-baisse-des-taux-trop-peu-trop-tard_1104639_1101386.html) finds consolation in today’s interest rate cuts by the European Central Bank, the US Federal Reserve, the Bank of England, and several other state banking agencies. At least, the coordinated move demonstrates “there is a pilot in the plane.”
But David Crossland at Der Spiegel (http://www.spiegel.de/international/business/0,1518,582927-2,00.html) is less sanguine. He writes that the European Central Bank’s actions “risk being undermined by the chaotic, confused response of EU governments.” He notes for instance the failure of economic officials from Germany, France, Britain, and Italy to reach substantive agreements at a mini-summit in Paris last weekend as proof of Europe’s unique cooperation challenge.
The glum news for Europe continues in yesterday’s IMF report predicting a global economic slowdown in 2009. The UK Guardian (http://www.guardian.co.uk/business/2008/oct/08/recession.globaleconomy) writes that ”lax macroeconomic and regulatory policies” particularly in the housing market are to blame for a predicted UK recession. Spain’s El Pais (http://www.elpais.com/articulo/economia/FMI/pronostica/Espana/entrara/recesion/proximo/ano/elpepueco/20081008elpepueco_11/Tes) laments Spain’s inclusion with Italy, Ireland, and Iceland as Europe’s most troubled economies.
Meanwhile, Wu Zhong at Asia Times (http://www.atimes.com/atimes/China_Business/JJ08Cb01.html) reports a calmer economic outlook for China. China’s financial system “remains pretty much closed by the standards of a free economy” and that the country will be less impacted by the liquidity crisis rocking much of the US and Europe. Zhong points to high Chinese savings rates, and consequent investment in US Treasury bonds, as important protective factors.
Do you believe we will all suffer economic pain? Or will some world regions be better protected than others? Tell us (link to submissions page) what you think here at Dear American Voter (link to DAV page).
