In late 2008, at a meeting with academics at the London School of Economics, Queen Elizabeth II asked why no one seemed to have anticipated the world’s worst financial crisis in the postwar period. The so-called Great Recession, which had begun in late 2008 and would run until mid-2009, was set off by the sudden collapse of sky-high prices for housing and other assets — something that is obvious in retrospect but that, nevertheless, no one seemed to see coming.
Are we about to make the same mistake? All too likely, yes. Certainly, the American economy is doing well, and emerging economies are picking up steam.… Seguir leyendo »
In 2007, the chairman of the Federal Reserve, Ben Bernanke, spent most of the year assuring markets that the U.S. sub-prime mortgage loan problem would be contained. In an all-too-similar manner, the European Central Bank president, Jean-Claude Trichet, now keeps asserting that Europe’s sovereign debt crisis does not pose a significant threat to the overall European economy, let alone to the global economy.
American policymakers would do well to disregard Mr. Trichet’s sanguine remarks and brace themselves for a European economic tsunami that is all too likely to seriously derail the fragile U.S. economic recovery.
Among the surer signs that a currency arrangement is approaching the end of its useful shelf life is when policymakers are forced to vehemently deny the possibility of any change in that arrangement.… Seguir leyendo »