The Global Economic Recession Is Watching Us Too? - Recession France

For everything about the crisis in financial markets ...


U.S. stock markets, European and Asian tumble, the U.S. banking sector suffers heavy losses (Merrill Lynch accuses a loss of $ 7.8 billion in 2007), and consumption in the U.S. plunged. All indicators of a possible recession in the global economy are present. How did we get here? Europe and especially France can they be affected? What are the options for overcoming the crisis? 20minutes.fr an update.

What is a recession? There is talk of recession when the Gross Domestic Product (GDP) decline of a country in two consecutive quarters.

The United States are not yet in this case. According to Natixis, which estimates that 40% risk of recession, growth amounted to 0.3% annualized pace in the first quarter 2008 and 0.9% in the second quarter. There is thus a slight increase, although the risk of going negative is not rejected. "Just a sharp rise in the unemployment rate as in December (0.3% to 5%)," explains Nathalie 20minutes.fr Dezeure, economist at Natixis. "During the previous recession, the unemployment rate was still higher than" relativise she said.

How did we get here? "The bursting of the housing bubble," respond by heart experts. "Everything is on the excess debt of American households," explains Nathalie Dezeure. Many economists criticize the American Federal Reserve (Fed) and his former boss, Alan Greenspan, for not having supervised the growth of mortgage credit risk ( "subprime"). Dean Baker is going to say in "Liberation" dated Thursday that the housing bubble was created to stop the recession caused by the explosion of the previous bubble in 2001 ...

Europe and France can they be affected? It depends on the intensity of the crisis in the United States. But the turmoil of U.S. financial markets have already achieved the European stock exchanges. "If our banks are beginning to be more restrictive conditions on borrowing, it will impact the French economy, for sure," warned Alexander Law, an economist at the institute Xerfi.

The side of the trade with the United States, the "Ireland, the Czech Republic and the UK are much more exposed than France," says Jean-Christophe Caffet of Natixis. "But if they are affected, France will eventually be too," he says, noting that "exposure to U.S. recession is asymmetric across countries in the euro zone." Alexander Law agrees: "If the dollar unscrews, France suffer more from the overvaluation of the euro." Understand: its products more competitive in emerging countries than Germany, more specialized, will be more difficult to export to USA.

Comment sortir de la crise? American Federal Bank in late January is expected to announce a fall in interest rates by 0.5 percentage points from 4.25 to 3.75% (against 4% for the European Central Bank). In order to allow banks to relax some of their borrowing in order to boost consumption and hence growth. "A boost tax should also be given to households," said Nathalie Dezeure. We then avoid the worst. However, according to Yves Marçais, strategist of Global Equities in Paris, the "divergence of views within the Fed and the ECB, one preparing to lower its rates and the other saying that it will perhaps back ", contributes to the confidence of investors. "If you look at history, he adds, it must be remembered that in 1987 this type of disagreement between Bundesbank and Fed at the time, which led to the crash. It is hoped that central bankers will be smart enough to remember. "

Catherine Fournier

Source: Here