Financial Pictures

Prof. Dr. Silvio Borner: “The financial crisis aside, the economic cycle had peaked in 2007/2008 anyway. This situation coinciding with the greatest disaster on the financial markets is threatening a spiral into a bad recession. Some people believe we could even face a depression like in the 1930s. I believe the financial crisis is slowly stabilising thanks to the huge state financial injections from central banks and finance ministries. The state programmes to stimulate the economy, which are also huge by historical comparison, lead us to hope that we will come through the lowest point in the economic cycle in the second half of 2009 or in 2010 at the latest. Both estimations are optimistic but not unrealistic. Will the problem be over then? Unfortunately not, as the growth crisis might only then really start to take hold. This risk exists precisely because of, and not despite, the historically unprecedented state intervention. The reason is the state may have overstretched itself financially and run up huge mountains of debt which will make things difficult in the future and in extreme cases could lead to new financial crises, this time state ones. The state has also taken large holdings in previously private financial companies, making investment management politically motivated. Nationalised banks have caused lots of problems in the past. Financial aid and economic injections obstruct or even prevent urgently needed restructuring within and outside the financial sector.”

Full article here http://www.revue.ch/nl02en