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To: RC one

The implications are that the markets are disrupted for more than a year, for starters.

Here is a recent paper by two people from the NBER comparing the current crisis to other financial period of turmoil since WWII in developed western economies. The take-away is that this won’t be over quickly, we could fall further and that such periods in markets don’t “solve” quickly:

http://ws1.ad.economics.harvard.edu/faculty/rogoff/files/Aftermath.pdf


10 posted on 01/03/2009 11:34:57 PM PST by NVDave
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To: NVDave

“An examination of the aftermath of severe financial crises shows deep and lasting effects on asset prices, output and employment. Unemployment rises and housing price declines extend out for five and six years, respectively. On the encouraging side, output declines last only two years on average. Even recessions sparked by financial crises do
eventually end, albeit almost invariably accompanied by massive increases in government debt...Indeed,
these historical comparisons were based on episodes that, with the notable exception of the Great Depression in the United States, were individual or regional in nature. The
global nature of the crisis will make it far more difficult for many countries to grow their way out through higher exports, or to smooth the consumption effects through foreign borrowing”

or, in other words, we’re f***ed.


13 posted on 01/04/2009 12:01:27 AM PST by RC one
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