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Who told Biden?…I know it wasn’t Bernanke

http://www.youtube.com/watch?v=zbPmXAyt8Io&NR=1

Add comment October 24th, 2009

A second Great Depression is still possible

Over the past year the global economy has experienced a massive contraction, the deepest since the Great Depression of the 1930s. But this spring, economists started talking of “green shoots” of recovery and that optimistic assessment quickly spread to Wall Street. More recently, on the anniversary of the Lehman Brothers crash, Ben Bernanke, Federal Reserve chairman, officially blessed this consensus by declaring the recession is “very likely over”.

The future is fundamentally uncertain, which always makes prediction a rash enterprise. That said there is a good chance the new consensus is wrong. Instead, there are solid grounds for believing the US economy will experience a second dip followed by extended stagnation that will qualify as the second Great Depression. Some indications to this effect are already rolling in with unexpectedly large US job losses in September and the crash in US automobile sales following the end of the “cash-for-clunkers” programme.

That rosy scenario thinking has returned to Wall Street should be no surprise. Wall Street profits from rising asset prices on which it charges a management fee, from deal-making on which it earns advisory fees, and from encouraging retail investors to buy stock, which boosts transaction fees. Such earnings are far larger when stock markets are rising, which explains Wall Street’s genetic propensity to pump the economy.

As for mainstream economists, their theoretical models were blind-sided by the crisis and only predict recovery because of the assumptions in the models. According to mainstream theory, it is assumed that full employment is a gravity point to which the economy is pulled back.

Empirical econometric models are equally questionable. They too predict gradual recovery but that is driven by patterns of reversion to trends found in past data. The problem, as investment professionals say, is that “past performance is no guide to future performance”. The economic crisis represents the implosion of the economic paradigm that has ruled US and global growth for the past thirty years. That paradigm was based on consumption fuelled by indebtedness and asset price inflation, and it is done.

There is a simple logic to why the economy will experience a second dip. That logic rests on the economics of deleveraging which inevitably produces a two-step correction. The first step has been worked through, and it triggered a financial crisis that caused the worst recession since the Great Depression. The second step has only just begun.

Deleveraging can be understood through a metaphor in which a car symbolises the economy. Borrowing is like stepping on the gas and accelerates economic activity. When borrowing stops, the foot comes off the pedal and the car slows down. However, the car’s trunk is now weighed down by accumulated debt so economic activity slows below its initial level.

With deleveraging, households increase saving and re-pay debt. This is the second step and it is like stepping on the brake, which causes the economy to slow further, in a motion akin to a double dip. Rapid deleveraging, as is happening now, is the equivalent of hitting the brakes hard. The only positive is it reduces debt, which is like removing weight from the trunk. That helps stabilise activity at a new lower level, but it does not speed up the car, as economists claim.

Unfortunately, the car metaphor only partially captures current conditions as it assumes the braking process is smooth. Yet, there has already been a financial crisis and the real economy is now infected by a multiplier process causing lower spending, massive job loss, and business failures. That plus deleveraging creates the possibility of a downward spiral, which would constitute a depression.

Such a spiral is captured by the metaphor of the Titanic, which was thought to be unsinkable owing to its sequentially structured bulkheads. However, those bulkheads had no ceilings, and when the Titanic hit an iceberg that gashed its side, the front bulkheads filled with water and pulled down the bow. Water then rippled into the aft bulkheads, causing the ship to sink.

The US economy has hit a debt iceberg. The resulting gash threatens to flood the economy’s stabilising mechanisms, which the economist Hyman Minsky termed “thwarting institutions”.

Unemployment insurance is not up to the scale of the problem and is expiring for many workers. That promises to further reduce spending and aggravate the foreclosure problem.

States are bound by balanced budget requirements and they are cutting spending and jobs. Consequently, the public sector is joining the private sector in contraction.

The destruction of household wealth means many households have near-zero or even negative net worth. That increases pressure to save and blocks access to borrowing that might jump-start a recovery. Moreover, both the household and business sector face extensive bankruptcies that amplify the downward multiplier shock and also limit future economic activity by destroying credit histories and access to credit.

Lastly, the US continues to bleed through the triple haemorrhage of the trade deficit that drains spending via imports, off-shoring of jobs, and off-shoring of new investment. This haemorrhage was evident in the cash-for-clunkers program in which eight of the top ten vehicles sold had foreign brands. Consequently, even enormous fiscal stimulus will be of diminished effect.

The financial crisis created an adverse feedback loop in financial markets. Unparalleled deleveraging and the multiplier process have created an adverse feedback loop in the real economy. That is a loop which is far harder to reverse, which is why a second Great Depression remains a real possibility.

Thomas Palley is former chief economist of the US-China Economic and Security Review Commission and  is currently Schwartz Economic Growth Fellow at the New America Foundation

A Second Great Depression Is Still Possible Thomas Palley

Add comment October 12th, 2009

A Short Question For Senior Officials Of The New York Fed

Add comment October 4th, 2009

Rushing to the Exits?

Bottom Line. The Fed is moving toward the exit as they look toward the conclusion of their securities purchases programs. But it is not clear that such a move is justified by their own forecasts or the inflation/wage/employment data. There may be an internal fear they have gone too far, a fear that the hawks can exploit. To be sure, I see no reason to expect the Fed will raise rates for a long time. And the Fed maintains it policy flexibility, claiming to be ready to revive asset purchases should economic or financial conditions justify. But I now suspect the bar for renewed expansion of Fed accommodation may be much higher than I had anticipated. And that the dominant push for expansion would have to come from financial market conditions, while they would be willing to tolerate persistently high unemployment rates so long as U. Michigan inflation expectations say elevated, regardless of the actual inflation data.

At Tim Duy’s Fed Watch

Add comment October 3rd, 2009

Why can’t everyone see this???

The consumer retreats

The world economy entered the current crisis in a badly lopsided condition, with the American consumer borrowing massively to buy products from Chinese and European manufacturers who happily socked away all their extra cash while producing more than their home markets could absorb. Now, pressed by rising unemployment and the need to rebuild shrunken household wealth, the American shopper is tapped out.

The consumer’s retreat is making itself felt around the world. The first six months of this year, Americans bought $18 billion fewer German-made goods than during the same period in 2008. For German factories, that meant the loss of more than 35% of their U.S. orders. It was the same story for Japan, which saw $31 billion worth of sales vanish — 42% of its total.

Major auto-producing countries weren’t the only ones to feel the chill. Chinese factories shipped almost $21 billion fewer goods to the U.S. during the first half of this year than during the same period last year. And with consumers still confronting several years of paying down debt and repairing their balance sheets, many economists say the world confronts a permanent shift in economic drivers.

“The world is going to be adjusting for years to slow growth from the U.S. consumer,” says economist Kenneth Rogoff of Harvard University. “The U.S. consumer has been the engine of world growth for the last quarter century; that engine has stalled.”

Not everyone agrees. Christian Broda, head of international economic research for Barclays Capital, says the world may be headed for slower growth, but that doesn’t mean no growth. Substantial monetary and fiscal easing that has been put in place has yet to make itself felt. As it does, growth will improve. Stories of a complete change in Americans’ behavior, he says, have been overdone.

“Savings will go up, but these processes will take years. …You won’t rebuild your wealth in a year,” he says.

Something has to give

Rather than seeking to restart the same engine in the same way, U.S. policymakers say, they want to construct a more durable economic foundation. Lawrence Summers, head of the president’s National Economic Council, said last month that the U.S. economy “must be more export-oriented and less consumption-oriented” as it emerges from the crisis.

That’s a sensible goal, but unfortunately, the U.S. isn’t alone in embracing it. German Chancellor Angela Merkel says there is “no alternative” to continuing her country’s longstanding reliance upon exports rather than boosting demand at home. Japan, too, shows no signs of making a fundamental shift. And Chinese officials, while acknowledging a desire to promote greater domestic consumption in the long run, are wary of moving too quickly for fear of killing jobs in their export factories.

“The world can’t cope with the U.S. and China both acting like China,” Magnus says. “What’s going to give?”

That’s not clear. Chinese consumption could accelerate faster than expected, though there’s no sign that is imminent. Through July, Chinese savings deposits rose at an annual rate of 29%, vs. 11.3% in the same period in 2008, according to DBS Group Research in Singapore. Alternatively, China might continue binging on investment. But that’s only a short-run fix, which would ultimately swell both production capacity and inventories, depressing global prices. Or the world recovery could limp along at an especially anemic pace for years.

The difficulties in achieving the sort of global rebalancing required are evident in the U.S.-China relationship. U.S. exports in June ticked up for the second-consecutive month, but by a modest 2.2% from the month before. And the value of total shipments remains deeply depressed compared with the year-ago period.

Rising exports, aided by the slumping dollar, have whittled away at the U.S. trade deficit. China’s corresponding trade surplus also is shrinking, but bigger reductions depend on getting Chinese consumers to buy more.

Chinese household consumption is among the lowest in the world, amounting to roughly 35% of economic output, vs. nearly 70% in the U.S. Chinese consumers save rather than spend, in part, to guard against unexpected medical expenses in a country that lacks a health insurance system.

Until China can put in place a national health care system, household consumption is unlikely to rise. “We need to be aware of the difficulties and should not be over-idealistic,” central banker Zhou Xiaochuan, head of the People’s Bank of China, said in a July 3 speech.

But reorienting China’s producers to serve local consumers rather than distant markets also would require far-reaching changes in several other national policies. An undervalued currency, rock-bottom interest rates set by government fiat and a lack of labor rights all effectively subsidize producers at the expense of consumers.

“There’s a whole bunch of policies that constrain consumption and boost production,” says Pettis, a former investment banker.

Quarterbacks Abound: Exports Can’t Fuel Global Recovery – USA Today

Add comment September 4th, 2009

The Forgotten Man

A Public Choice Primer

Amity Shlaes, a senior fellow in economic history at the Council on Foreign Relations, has an excellent primer on public choice in the August 3 edition of Forbes, “The New PC.” Shlaes is also the author of the 2007 book, The Forgotten Man: A New History of the Great Depression. Shlaes, who will be featured in the upcoming issue of Religion & Liberty, writes, “Government reformers view themselves as morally superior, but that is an illusion. They are just like private-sector operators, who do things that are in their own interest, not society’s…

Add comment August 26th, 2009

Obama’s Economic Box

Barely six months in office, President Obama already finds himself in an economic box. For despite his aggressive and costly economic policy initiatives, the jobs market shows no sign of healing. At the same time, the housing market foreclosure crisis continues apace, while renewed questions are again surfacing about the soundness of the U.S. banking system. To complicate matters, financial markets are now starting to fret about the longer-run inflationary consequences of the unusually large budget deficits in prospect for as far as the eye can see.

In January 2009, on presenting its $780 billion fiscal stimulus package, the Obama administration assured the public that because of that stimulus package U.S. unemployment would not exceed 8 percent. Yet already by June 2009, unemployment had risen to 9.5 percent; including part-time workers, who would prefer to be working full time, unemployment rose to a staggering post-war high of over 16 percent. Worse still, the jobs market shows every sign of being far from bottoming out.

The degree to which unemployment has exceeded the administration’s forecasts has to raise basic questions about the appropriateness and coherence of President Obama’s economic policy approach.

The degree to which unemployment has exceeded the administration’s forecasts has to raise basic questions about the appropriateness and coherence of President Obama’s economic policy approach. These questions pertain not simply to the very poor design of the fiscal stimulus package. Rather they pertain to the adequacy of the measures aimed at stabilizing the housing market and at resolving the country’s most wrenching credit crisis in the post-war period.

At the most basic level, one has to question how much sense it made for President Obama to allow the fiscal package to become excessively back-loaded at time when the economy needed immediate large scale support. If a large fiscal stimulus was indeed needed, why has only $60 billion of that package been dribbled out by June? And why is less than a third of the package scheduled to come into effect in 2009, the year when the package is most sorely needed?

Similarly one has to wonder about the heavy price that the Obama administration paid for effectively outsourcing the package’s design to House Speaker Nancy Pelosi and the rest of the Democratic congressional leadership. Should it really have come as a surprise to us that the resulting stimulus package would be laden with pork and with expenditures that are going to be very difficult to roll back? Or should we now be shocked that the package fell sadly short of including fast acting and effective fiscal stimulus measures that might have gotten the most bang for the buck?

Perhaps the most troubling aspect of the Obama fiscal stimulus package is the serious way in which it compromises the country’s long-run public finances and fans long-run inflationary expectations. The nonpartisan Congressional Budget Office estimates that the Obama budget not only implies unusually large budget deficits over the next two years but it implies that, even when the economy eventually fully recovers, the deficit will remain in the region of between 4 and 6 percentage points of GDP. As a result, over the next decade, the public debt will rise in a manner that has never occurred before in peacetime, from around 41 percent of GDP in 2008 to 82 percent of GDP by 2019.

Over the next decade, the public debt will rise in a manner that has never occurred before in peacetime from around 41 percent of GDP in 2008 to 82 percent of GDP by 2019.

The rising tide of unemployment must also raise questions about the Obama administration’s efforts to stabilize the housing market, which the administration correctly views as a necessary condition for producing a meaningful economic recovery. One has to expect that a weaker job market will only exacerbate the country’s present foreclosure crisis, which is adding supply to an already glutted housing market. The Center for Responsible Lending estimates that 2.4 million homes could be in foreclosure in 2009 and as many as 8.1 million homes over the next four years. Yet, the Obama administration’s loan modification program announced earlier this year has to date only resulted in 190,000 offers at mortgage loan modification.

Rising unemployment also has to raise questions about whether the Obama administration is not being overly sanguine about the health of the U.S. banking system. For it would seem that unemployment will now well exceed the worst-case scenario in the bank stress test presented by the administration earlier this year. Yet, despite a weakening unemployment outlook that is sure to boost bank losses, the Obama administration is now cavalierly backing away from its earlier initiatives to reduce the toxic assets that remain on the banks’ balance sheets.

Less than six months into his term, President Obama already faces difficult economic policy choices. He can choose, as he now seems to be doing, to counsel patience and assure us that all is well at considerable cost to his credibility on economic policy management. Or he can own up to the facts that he misread the economy in January and that his economic team now needs to go back to the drawing board. For the sake of the U.S. economy, one has to hope that he has the courage to review the overall coherence of his policy approach before it is too late.

Desmond Lachman is a resident fellow at the American Enterprise Institute. He was managing director and chief emerging market economic strategist at Salomon Smith Barney and a deputy director in the International Monetary Fund’s policy and review department.

FURTHER READING: Lachman wrote “Does Bernanke Really Deserve a Second Term?” and “Despite the Doubters, It’s Still Top Dollar” on the likelihood that the Chinese renminbi will eventually replace the U.S. dollar as the world’s preeminent international reserve currency. He also penned “Can the IMF Really Save the World Economy?” and “The World Economy’s Europe Problem.” His article “Don’t Repeat Japan’s Mistakes” warns against the policies Japanese authorities followed during their financial crisis in the early 1990s.

Obama Is Stuck In an Economic Box – Desmond Lachman, The American

Add comment July 15th, 2009

What Depression?

Our current economic crisis has revived economic and political discussions about the Great Depression. One reader wrote to me that Google citations for both the “Great Depression” and the “New Deal” have increased by several million since just last year. And while our current crisis remains far milder than the Depression, many nevertheless compare the two episodes, particularly when it comes to discussions about what the government should–or should not–do to promote economic recovery. And comparisons between today and the Great Depression will not end soon, as our crisis continues, and as some have called for a second round of federal spending to promote recovery.

A number of commentators and some in Congress have cited some of my research on the New Deal to caution against large-scale government programs to spur recovery, while research by other economists, including Dr. Christina Romer, chair of President Obama’s Council of Economic Advisers, is cited by others in Congress for the need for large-scale stimulus programs. (Both Dr. Romer and I presented our views during recent testimony before the U.S. Senate Banking Committee. Hers can be found here and mine here. )

Why Are Economists Divided About the Depression? – Lee Ohanian, Forbes

Add comment July 15th, 2009

Our $17 Trillion Chinese Split Won’t Be Pretty

Returning from China last month, U.S. Congressman Mark Kirk had a bearish take on a high-level visit by American officials.

Treasury Secretary Timothy Geithner claimed the U.S.’s biggest creditor voiced great confidence in its debt. Kirk, an Illinois Republican, came back with the opposite impression.

“China is beginning to cancel Congress’s credit card,” he told Fox News on June 10. It “doesn’t want to lend much more money to the United States and especially is worried about the Fed’s policy of printing money to buy new debt.”

A month later, there’s no doubt about whose assessment was more accurate. Chinese leaders are clearly very concerned about the dollar. How they will react is a key question hanging over markets, and it’s time to take the discussion to the next level.

Everyone knows China wants to reduce its dollar holdings. Little is known about how that process may unfold and how much work and preparation needs to go into it. Lots, in fact.

Think of China and the U.S. in history’s most expensive divorce. The two economies total $17 trillion of output, and polls in China show little support for adding to almost $800 billion of U.S. Treasuries.

This argument can be broadened to the rest of Asia. The idea that China or Japan — with $686 billion of Treasuries — can just start selling massive blocks of dollars is ridiculous. It would devastate markets the world over and the fallout would boomerang back on Asia. If you think markets are shaky now, just wait until word of a central-bank fire sale gets around.

Copycat Selling

Sure, Singapore (with $40 billion of Treasuries), India ($39 billion) or South Korea ($35 billion) could try to dump dollars on the stealth. Good luck in this highly connected, around-the-clock world. News that a key economy seeks a first- mover advantage over peers would inspire copycat selling. Expect investors and traders to respond with massive sell orders.

Warren Buffett can discreetly trim Berkshire Hathaway Inc.’s interest in a company or a currency. How a central bank divests itself of tens or hundreds of billions of dollars on the sly is another matter.

Governments that may be concerned about getting stuck with their dollars for good have a point. And by curtailing investments in dollars today, Asia is ensuring that the U.S. currency will be worth less a year from now. Bernard Madoff can tell you a thing or two about how this process works.

Dollar Accord

What may be necessary is a global framework or pact to end the dollar’s dominance. A “Plaza Accord” of sorts may be needed to dismantle the so-called Bretton Woods II system of tying currencies to the dollar that emerged after the global crises of 1997 and 1998. A Dollar Accord, anyone?

Just as stocks take a hit when additional shares are issued, Asia faces a debt-dilution dynamic for which it never bargained. The Federal Reserve’s zero-interest-rate policies don’t help. And Asia can’t do a lot on its own here.

This process will require considerable cooperation, be it through the International Monetary Fund, the Group of 20, the Asia-Pacific Economic Cooperation forum, the Association of Southeast Asian Nations or a yet-to-be-created entity. Goals must be set, mechanics discussed and timing negotiated. If ever there were a time for a currency summit, it’s now.

Politics will be a stumbling block. It’s hard to envision the U.S. signing on to scrap the dollar as the reserve currency. Neither the euro nor the yen is ready to replace it. And China’s designs on currency domination are a decade away — or longer.

IMF Solution

The amount of scrutiny the dollar’s successor would face makes you wonder who would want to print the reserve currency. That explains why the most credible argument making the rounds involves the IMF’s so-called Special Drawing Rights, or SDRs.

They are really an account of exchange, rather than legal tender, and are calculated according to a basket of currencies consisting of the dollar, euro, yen and pound. Chinese central bank Governor Zhou Xiaochuan wants the IMF to move toward creating a “super-sovereign reserve currency.”

Or, here’s another suggestion: Brady bonds for less- troubled economies. The idea behind bonds created in the 1980s as part of Latin America’s debt restructuring was to let investors swap their claims on nations in turmoil for tradable instruments. A similar process may work with the dollar.

Rumors of the dollar’s demise are no longer exaggerated. What is being exaggerated, though, is how easy it will be for Asia to get out of the quandary it’s in. Cutting off the U.S. government’s credit card, for example, means American consumers can’t buy your goods. And any sudden divorce between the world’s two main economic powers won’t be pretty. Far from it.

It’s time to figure out what the next step is, and policy makers need to get serious. Complaining about our dollar-based system won’t get us there. Some brainstorming about where to go from here would be far more constructive.

(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)

Our $17 Trillion Chinese Split Won’t Be Pretty – William Pesek, Bloomberg

Add comment July 14th, 2009

The end of the recession will merely be the start of a long, painful journey, says Edmund Conway.

t’s a game of far more than two halves: more tactical than cricket, more stomach-churning than boxing and more complex than bridge. Throughout a magnificent summer of sport, one competition has lasted longer than any other, and generated the most heated debate. Its goal? To guess when the recession will end.

Every week, it seems, has brought new economic indicators, good or bad. Indeed, the whole thing has recently descended into farce: first, economists were tripping over themselves to declare that we were heading for a “V-shaped” recovery, in which we soared out of the downturn at speed. Then they realised that the economy had contracted in the first three months of the year at the fastest rate since, most probably, the 1930s (the quarterly figures don’t go back that far), and started talking about “double dips”.

When Recovery Comes, It Won’t Feel Like It – Ed Conway, Daily Telegraph

Add comment July 9th, 2009

Say that ten times – a convincing mantra

So maybe we could summarize the recent strength in the leading economic index this way. The main reason we think the economy is improving is because many of us think the economy is improving.

I Think The Economy Is Improving, Therefore It Is – Econbrowser

Add comment June 29th, 2009

Transparency: The Largest Bankruptcies in History

Last week, General Motors began the fourth largest bankruptcy proceedings in history, joining the many other large and venerable companies that have sunk to the bottom during this economic crisis. In fact, eight of the 20 largest bankruptcies have happened during the last two years of crisis. Our latest Transparency is a look at the biggest sinking ships in business history.

A collaboration between GOOD and Always With Honor.

Transparency: The 20 Largest Bankruptcies in History – Good Magazine

Add comment June 16th, 2009

Forgetting What We Learned

ILLITERACY IN HIGH PLACES

by Paul Craig Roberts

If a person lives long enough, he can watch everyone forget everything they learned.

The hubris is extraordinary. A bankrupt government that has to send its Treasury Secretary begging to China thinks it can spend limitless amounts in a futile effort to control the culture, mores, and political system of distant Afghanistan.

Add comment June 6th, 2009

Feeling the Squeeze, Exclusive Country Clubs Get the Common Touch

Their standing dinner reservation at the country club is for 6:30 p.m., because at least that much never changes. Every Wednesday night, Charles and Mimi Cluss dress in pleated slacks and suit jackets and drive to the manicured playground where Uniontown’s elite have gathered for 101 years. It is like a “second home,” Charles says of the place where he finalized deals for his lumber company and hosted weddings for two daughters. Except on this night in mid-May, he no longer knows what to expect.

Tough times for the country club set. (WashingtonPost)

Add comment May 30th, 2009

It’s Official: Worst Recession in Five Decades

This recession is now the worst since at least 1958, which is as far back as the index of coincident indicators stretches back.

The Conference Board reported today that the index, which is intended to measure how the economy is doing on an overall basis, slipped a little in April. The decline was smaller than in previous months, and two of the four indicators edged up, which could be taken as a sign that the economy is at least getting worse at a slower pace.

As I noted last month, the index was nearing the 5.6 percent decline that it experienced in the 1973-1975 recession. Now it is down 5.7 percent.

One way to put that into perspective is that the decline so far in this recession is more than the maximum falls combined in the two previous recessions, in the early 1990s and then in 2001.

“..the decline so far in this recession is more than the maximum falls combined in the two previous receptions, in the early 1990s and then in 2001.” (Floyd Norris)

Add comment May 27th, 2009

Beggars Are We All…..

http://jessescrossroadscafe.blogspot.com/

Bernanke’s wager is on a virtual free lunch by printing money.

“Fed chair Ben Bernanke has long argued that central banks can bring down long-term borrowing rates by purchasing bonds “at essentially no cost”. His frequent writings rarely ask whether foreigner investors – from a different cultural universe – will tolerate such conduct. Mr Bernanke is betting that under a floating currency regime there is no risk of repeating the disaster of October 1931, when the Fed had to raise rates twice to stem foreign gold withdrawals, with catastrophic consequences.”

“

Add comment May 25th, 2009

Global Crisis ‘Vastly Worse’ Than 1930s, Taleb Says

From Bloomberg:

May 7 (Bloomberg) — The current global crisis is “vastly worse” than the 1930s because financial systems and economies worldwide have become more interdependent, “Black Swan” author Nassim Nicholas Taleb said.

“This is the most difficult period of humanity that we’re going through today because governments have no control,” Taleb, 49, told a conference in Singapore today. “Navigating the world is much harder than in the 1930s.”

The International Monetary Fund last month slashed its world economic growth forecasts and said the global recession will be deeper than previously predicted as financial markets take longer to stabilize. Nouriel Roubini, 51, the New York University professor who predicted the crisis, told Bloomberg News yesterday that analysts expecting the U.S. economy to rebound in the third and fourth quarter were “too optimistic.”

“Certainly the rate of economic contraction is slowing down from the freefall of the last two quarters,” Roubini said. “We are going to have negative growth to the end of the year and next year the recovery is going to be weak.”

Federal Reserve Chairman Ben S. Bernanke told lawmakers May 5 that the central bank expects U.S. economic activity “to bottom out, then to turn up later this year.” Another shock to the financial system would undercut that forecast, he added.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=avf2KVFwU8xQ

Add comment May 7th, 2009

IMF warns over parallels to Great Depression

The International Monetary Fund has warned of “worrisome parallels” between the current global crisis and the Great Depression, despite the unprecedented steps already taken by central banks and governments worldwide.

http://www.telegraph.co.uk/finance/financetopics/recession/5166956/IMF-warns-over-parallels-to-Great-Depression.html

Add comment April 17th, 2009