Now that the economic downturn which began in the United States has spread in a very major way to the rest of the world, who’s to blame? According to the editorial board of French newspaper Le Monde, the blame in large measure goes to ‘Western economic and monetary leaders have long explained that the worst was ‘unlikely.’”
EDITORIAL
Translated By Kate Davis, January 23, 2008
France – Le Monde – Original Article (French)American economist John Kenneth Galbraith, who studied crashes down to the last detail, wrote, “What we do know is that speculative episodes never come gently to an end. The wise, though for most, the improbable course, is to assume the worst.” The subprime crisis confirms his judgment. With a brutality unseen since September 11, 2001 – this is first of all why stock markets have been dropping for several days.
The worst, then, seems to be heading our way very quickly. It’s not clear by what miracle the world’s leading economy – that of the United States – will manage to escape a recession. The global banking system, for its part, is vacillating. Some of the biggest American and European institutions find themselves in a situation so critical that to bail themselves out, they had had to call in emergency capital from Asia and the Middle East.
The shock was all the more rude since Western economic and monetary leaders have long explained that the worst was “unlikely.” The American Federal Reserve estimated that the bill for the subprime problem would hardly exceed $100,000 billion. It has now risen to several hundred billion. Like her colleagues, French Finance Minister Christine Lagard has long argued that the real economy wouldn’t be affected by this purely financial crisis. This was supposed to be reassuring, but its soothing nature only slowed the realization among economic actors of the gravity of the situation.
In a globalized and financialized economy, how is it imaginable that the catastrophe would remain confined to the United States, and have only a marginal impact on the planetary growth? … That the Chernobyl cloud of the subprime crisis would not cross the Atlantic? From tiny Norwegian towns on the verge of bankruptcy because of their reckless investments to banks in Communist China, the entire world is now affected.
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