The Great Debate

from Reuters Editors:

And the band played on: covering the economic crisis

dean-150I recently visited one of the most frightening sites on the Web—the place where I look at my shrinking retirement account.

As I calculated the investment loss since the steep decline in the markets began, and particularly since the collapse of Lehman Brothers in mid-September, some questions arose (in addition to: Will I ever be able to retire?).

--Did we in the media do our job in reporting on the run-up to the crisis?

--Now that an “official” recession has been declared in the U.S. and the depth of the crisis is becoming clearer around the world, are we in the media keeping things in perspective? Should we even be using words like “crisis” or “meltdown?”

On the first question, I can’t help thinking of Claude Rains’ “Casablanca” character Captain Renault, who was “shocked, shocked to find that gambling is going on” in Rick’s club. In hindsight, given the current state of the financial markets, wasn’t it obvious a problem was brewing?

Not necessarily. And it probably wouldn’t have been obvious to anyone reading online or print coverage or watching television news in the United States.

from Global Investing:

Robin Hood in reverse?

Thirty-first U.S. President Herbert Clark Hoover once said: "Blessed are the young, for they shall inherit the national debt."

Governments around the world are borrowing heavily to finance their fiscal expansion – unprecedented in size and scale – to prevent severe economic downturn.

However, outspoken independent economist Roger Nightingale thinks fiscal stimulus will not work.

Debate surrounding the world economic crisis

World leaders vowed to work together in overhauling the global financial system as they headed to Washington for a summit on wresting the global economy from recession and avoiding future meltdowns.

Far from the confines of Washington, Reuters readers launched into a lively debate, sparked by Reuters columnists and experts, on what this means for the global financial crisis.

One of the more lively discussions arose from a column theorizing the financial crisis is the greatest threat to international security. Paul Rogers, Professor of Peace Studies at Bradford University and Global Security Consultant to Oxford Research Group argues:

A long, shaky bridge to recovery

jimheadshotsmall– James Saft is a Reuters columnist. The opinions expressed are his own –

The lessons of Japan’s stumbling path out of deflation and recession suggest that government spending can help stave off an extended recession, but it may take years not months and require an unlikely combination of political will and consensus.

That’ll be a lot of bridges to nowhere.

The particular type of recession the United States faces, a balance sheet one, means that cutting interest rates will be really pretty ineffective, and while you can throw everything you have at saving the banking system, you can’t make people and businesses borrow and put the money to work. They too have their own balance sheet problems, having loaded up on debt and holding as they are assets like real estate and stocks that have fallen in value.

Global recession has begun

John Kemp — John Kemp is a Reuters columnist. The opinions expressed are his own –

LONDON (Reuters) – Yesterday’s bleak reports on the state of U.S and European manufacturing confirmed that a global recession has already begun.

The Institute of Supply Management (ISM)’s composite business activity indicator plunged for the second month to 38.9 – far below the 50-point threshold dividing expanding activity from a contraction, and the lowest level since September 1982 (see chart https://customers.reuters.com/d/graphics/US_ISM1108.gif).