The Economic Impact Of 2012

Oct 6 2011 @ 8:19am

Kenneth Rogoff foresees more "politically-induced volatility" as the global economy succumbs to pre-election political inertia:

In normal times, any dynamic that shut down the political business cycle might well be interpreted as a plus for longer-term stability and growth. But the risk of partisan political paralysis in the face of a potential euro crash is another matter. Imagine, for example, that US growth collapses so severely that once again a major financial company finds itself on the brink of bankruptcy. Will the Fed and the Treasury be able to prevent a full-scale panic and systemic collapse in a timely fashion? Perhaps, but pre-election paralysis might make the task even harder than it was in 2008, particularly thanks to Dodd-Frank legislation aimed at preventing bail-outs.