"Three months ago it was reasonable to expect that the subprime credit crisis would be a financially significant event but not one that would threaten the overall pattern of economic growth. This is still a possible outcome but no longer the preponderant probability. Even if necessary changes in policy are implemented, the odds now favor a US recession that slows growth significantly on a global basis. Without stronger policy responses than have been observed to date, moreover, there is the risk that the adverse impacts will be felt for the rest of this decade and beyond. Several streams of data indicate how much more serious the situation is than was clear a few months ago."
Summers is not the smartest guy on the block. If he was he wouldn't have said men are smarter than women and he'd still be president of Harvard. But he's a capable economist and he can sniff disaster as it comes stampeding round the corner.
crossposted from informationclearinghouse.info
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