Deutsche Bank: Worst Slump Since Great Depression

[Purveyor]

Major industrialised economies will suffer the worst slump since the 1930s, according to new research from Deutsche Bank.

By Edmund Conway
19 Oct 2008

The warning underlines the fact that policymakers have failed to prevent the financial crisis from turning into a full-blown economic slump. It comes as world leaders agreed to hold a summit in New York billed as the “Bretton Woods meeting for the 21st century”.

In its major assessment of the global economy’s health, Deutsche Bank also warned that Britain is even more vulnerable than the US or the euro area, as it predicted that the powerhouses of India and China would fail to support the wider global economy through the downturn.

The banks’ economists Thomas Mayer and Peter Hooper said: “We now expect a major recession for the world economy over the year ahead, with growth in the industrial countries falling to its lowest level since the Great Depression and global growth falling to 1.2pc, its lowest level since the severe downturn of the early 1980s.”

According to the International Monetary Fund, global growth of anything less than 3pc constitutes a world recession. The warning was echoed by Richard Berner of Morgan Stanley, who said: “A global recession is now under way, and risks are still pointed to the downside for commodity prices and earnings.”

The forecasts came as President George W Bush called a summit of the Group of Eight leading economies for the weeks after the US Presidential Election in order to organise a concerted response to the economic downturn.

Together with French President Nicolas Sarkozy and European Commission President José Barroso, Mr Bush slated a meeting which many think echoes the historic Bretton Woods summit which laid down a structure for the post-war financial system.

However, within minutes of the announcement, significant differences had opened up between Mr Bush, who has insisted that the new deal should not undermine free markets, and Mr Sarkozy, who said: “We cannot continue along the same lines because the same problems will trigger the same disasters. This sort of capitalism is a betrayal of the sort of capitalism we believe in.”

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TELEGRAPH UK: http://www.telegraph.co.uk/finance/comment/edmundconway/3227454/Worst-slump-since-Great-Depression.html

[sattahipdeep]

1. The same problems will trigger the same disasters. n/t

[JohnnyRingo]

2. Wow...Sarkozy is the conservative darling of RW Americans

Matbe I should say he was the darling of Freepers.
I imagine we'll have to go back to freedom fries again for a while until they learn their lesson.

[Selatius]

3. Sarkozy is under pressure from the Socialist Party to push a more regulated version of capitalism.

They along with the rest of Europe would lay blame for the economic slump on the US' abject failure to properly regulate its own markets, and now that the sewer pipe has burst, the sludge from the US is now flooding into their backyard.

[gopbuster]

4. New Global currency coming? Something to watch for. nt