If you’re like me, you’ve certainly wondered why economic growth has been so sluggish after the worst post-war recession — the Great Recession, or Great Financial Crisis as some have callednthe 2007-2009 crisis. Normally, the economy should have surged, after such a deep slump.
Instead, we’re proud of economic growth figures around 2% in Britain and the US and cheer when the eurozone posts a meager GDP advance of above 1% almost a decade after the crisis.
The issue of the runaway Swedish housing price bubble has been well known for a while, and the problem just keeps growing bigger. At this point, however, any attempt to tackle it could make things worse.
As more and more people fret about imminent interest rate increases by the Federal Reserve and the Bank of England, a report release by the Bank for International Settlements (BIS) shows that companies and households in the UK would be able to cope relatively well with a rate increase.
Inflation has been on a break for a while, and worries about deflation mount. But rather than worrying, perhaps it would be better to see this new face of the crisis as an extraordinary opportunity: that of doing away with debt as the main driver of growth.
This article was first published on the website of the European Bank for Reconstruction and Development (EBRD).
The Swiss National Bank’s January decision to remove the Swiss franc’s cap against the euro has sent shockwaves through the global economy. It triggered particularly strong reactions in parts of central and south-eastern Europe, where currencies in some countries came under severe pressure.
The story on the need to bail out households just like we bailed out the banks has sparked some controversy. To some extent, this was to be expected – but the truth is that forgiving household debt is the only real way out of the crisis.