Wed Apr 2nd, 2008 at 11:54:54 AM EST
It's funny, living in America, I seldom get the impression, watching the news, that anything is fundamentally and severely wrong with the state of Anglo-American capitalism in the US. The candidates are not really talking about it. The business pages, to be sure, talk about the housing crisis here, the credit crunch there, but you have to listen hard because every other day, we also hear about a rally which shows that the fundamentals are really strong, corporate profits as a percent of GDP are really quite good and so on.
So as you crane your neck and listen hard, you can and do hear about different dots in the matrix of the unfolding financial crisis in US markets, but rarely does anyone in America connect those dots.
Fortunately, we have the IMF to cut through the American press bullshit...
The International Monetary Fund cut its forecast for global growth this year and said there's a 25 percent chance of a world recession, citing the worst financial crisis in the U.S. since the Great Depression.
Hmmm, my teevee over here never uses that Great Depression phrase. Why is that?
Instead, the US press refers to what's going on as the worst in the post-war era. Obviously, the memo went out and the American 4th estate got it and is busy stenographically reproducing it in major news outlets across the land. (And note, when I say American 4th estate, I'm being sarcastic, fully aware that it is appendage of the 2nd estate, though noting nothing particularly noble about America's version of it...)
Depression, post war, what's the difference, America?
``The financial shock that originated in the U.S. subprime mortgage market in August 2007 has spread quickly, and in unanticipated ways, to inflict extensive damage on markets and institutions at the core of the financial system,'' the statement said. ``The global expansion is losing momentum in the face of what has become the largest financial crisis in the United States since the Great Depression.''
Ahh, that d-word again. Thank god for French social democrats, and DSK, there's some truth coming out of Washington today.
But what's that, I hear? A french social democrat calling for looser ECB monetary policy? I think Jerome will be disappointed...
The reduction is the third by the Washington-based lender since last July, when it predicted the world economy would cope with the U.S. credit squeeze and grow 5.2 percent this year. Central banks will need to conduct policy ``as flexibly'' as the circumstances warrant, the statement said, adding that the European Central Bank has room to lower borrowing costs.
Ever the contrarian, I think perhaps it might be time to stand pat. Lowering the target rate in effect helps the US monetize its way out of a mess of its own doing. A mess of a big shitpile, incidentally, which is ending up on the shoes of European banks...
Maybe helicopter Ben can print some dollars to bail out UBS, he's got the printing press. Why should tricky Trichet do it?
Perhaps the IMF might do well to prepare a financial rescue plan for Amerika and present it to its member banks for approval (or not). Because it's becoming clearer and clearer...we may actually have them, monetarily at least, by the balls, and we may be seeing, like Bretton Woods in its day, a very key turning point in monetary policy history.